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Valuation Insights & Perspectives: 3RD Quarter 2007

The latest issue of Valuation magazine looks at Identity Theft and the ways technology and regulation, or lack thereof, are playing a role. Included is an overview of a variety of “digital signature” products designed to combat such fraud.

Fighting Fraud: Digital Security on Appraisals
06/21/2006  Working RE Magazine

I am a Certified Residential Appraiser in Southern California who has first-hand experience with appraiser identity theft. Fortunately, I was able to curb the illegal activities of one of my former appraiser trainees who decided to go into business for himself, by explaining the seriousness of his actions and threatening to press charges.

As a result, I began researching how to protect myself and my business. I learned pretty quickly just how vulnerable we appraisers really are and how little we could do to protect ourselves from identity theft and the manipulation of our appraisal reports.

Fraud grows as technology advancements make it easier to alter documents. With law enforcement focused on violent crime and terrorism, the challenge of reducing appraisal fraud and its associated losses falls upon the document producer. As appraisers, our job is to give an
opinion of value; if this is not reliable, the credibility of our profession is at risk.

New digital barcode technology provides appraisers with definitive high-level security. As document producers, we appraisers have a duty and a responsibility to protect our work.

Digital Barcode Solution
I imagined using barcodes as a security solution for appraisals but what seems like a logical solution only became practical when I later discovered two-dimensional digital barcodes.

Appraisal Matrix, LLC has created a method of securing the origin, authenticity and identity of the appraiser. Only those with an active appraiser license will be able to use the software. On the other end, software ensures the integrity, reliability and accuracy of crucial data in the delivered appraisal report. It is able to verify that the information has not been manipulated from the original essence. This creates a security solution to a problem that is threatening appraisers and the lending industry.

Stepping Up to the Digital Barcode
Data Matrix digital barcoding is able to mark each individual appraisal with a unique identifier. Each code can contain unique information up to 2335 alphanumeric characters which includes encryption.

The software compresses the encrypted data- such as appraiser info, value, address, client, and date the report was signed, and then generates a 2D data matrix symbol to insert into the appraisal report. Within seconds the software creates a data matrix ready for pasting into the report as a Bitmap image. The lender on the other end is able to immediately decode and access the information and verify it independently. After the image is decoded, end-user software converts the data into a one-page verification report so the user can print and compare with the appraisal report.

Barcoding has been around some 30 years and has recently advanced exponentially with digital barcode technology. The Department of Homeland Security has created new initiatives to incorporate 2D digital barcode technology for passports, ID cards, birth certificates, etc. New laws will quickly make these initiatives a reality. For example, a new federal law was just passed and already more than half of the states are using 2D barcodes on driver’s licenses and automobile registration documents.

This new application of 2D digital barcode technology has shown to be an effective way to address document security concerns. The same can be done for the appraisal profession.

Kirk Pruitt is the CEO/Founder of Appraisal Matrix, LLC and a California Certified Residential Appraiser, who has been in the industry eight years. .