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August 29, 2023
The First Line of Defense: Notaries Public and the Battle Against Fraud
Often perceived as mere custodians of routine formalities, Notaries Public are, in fact, the unsung heroes maintaining the very foundation of our legal and economic infrastructure. They stand as the first line of defense against a variety of fraudulent activities that could otherwise cripple the housing market, disrupt property ownership, and throw into disarray many other sectors that depend on legitimate, enforceable contracts.
Their role transcends the perfunctory act of witnessing signatures; they serve as the impartial eyes that scrutinize the legitimacy of transactions, thereby allowing businesses, governments, and individuals to interact with confidence. Whether it’s facilitating a first-time home purchase, helping a small business secure a critical loan, or assisting in the transfer of assets, the actions of a Notary Public serve as the cornerstone that enables major economic activities to take place with a higher degree of security and reliability.
In this interconnected economy, where one weak link can cause systemic failures, the role of the Notary Public becomes all the more pivotal. Therefore, their value is not just additive but multiplicative, creating an environment where transactions and agreements can occur smoothly, underpinned by a bedrock of verified integrity.
While the notarial profession often relies on primary forms of identification for verification, this traditional method is increasingly becoming susceptible to exploitation by fraudsters armed with sophisticated, high-quality fake IDs. Notaries should advocate for legislative changes that will usher in a new era of identification validation, leveraging modern technology to their advantage. Advanced identity verification methods like those found on RON platforms should be required for “paper” notarizations as well. By pushing for such laws, especially for high-stakes documents like deeds, mortgages, and powers of attorney, notaries can fortify the already critical line of defense they provide against fraud.
Until these much-needed legislative changes are enacted, the onus lies with the notaries themselves to become adept at spotting fraudulent IDs. This is not merely a preventative measure for the transaction at hand but a vital step in shielding the notaries from future legal liabilities. The stakes are high, not just for the individuals and institutions directly involved in the transaction, but for the economy as a whole.
While it’s true that not all states have a legal requirement for notaries to maintain a journal, adhering to this practice should be regarded as an indispensable, non-negotiable aspect of the notarial profession from both an ethical and practical standpoint. A meticulously kept hard-bound or electronic journal acts as the first line of defense against accusations of fraud or malpractice, transcending its role as a record-keeping tool to become a historical archive of your professional diligence. It lays out a transparent trail of activity that is not only useful in resolving any immediate questions or disputes but also invaluable in a broader legal context. For instance, in cases of deed fraud schemes that may only come to light years after the original notarization, a well-maintained journal could provide critical information for both proving the notary’s due diligence and tracing the origins of the fraudulent activity. In a rapidly changing economic landscape where fraudsters employ increasingly sophisticated methods, the maintenance of a journal amplifies the notary’s role as a custodian of trust.
The topic of a notary’s right to refuse service is a nuanced and often legally ambiguous one, depending on jurisdiction and circumstance. Although it might not be clearly established law in every state, ethical guidelines generally suggest that notaries should decline a transaction if they sense irregularities or suspect fraudulent activity. Such circumstances may include, but are not limited to, the client’s inability to provide valid identification, visible distress or coercion, or incomplete or suspicious-looking documents.
In cases where refusing outright isn’t feasible or could compromise safety, an alternative approach may be to subtly inform the other parties involved that there are irregularities that warrant closer examination. By doing this, the notary not only helps to mitigate potential fraud but also leaves an open channel for proper investigation without drawing unnecessary attention or risking their own well-being.
In conclusion, the evolving landscape of fraud makes the role of Notaries Public more critical than ever, both as a protective measure and as an instrument of trust in our economic system. Their significance extends far beyond routine paperwork; they are the silent watchdogs on the front lines, navigating an increasingly complex maze of fraudulent activities. As they rise to meet these challenges, they don’t just protect themselves; they reinforce the integrity of our entire transactional framework, reaffirming the indispensability of their role in a modern economy.
David Fleck, Esq. is a former real estate fraud prosecutor and the author of Fraud Investigations 101: The Ultimate Resource About White Collar Crime, which is available on Amazon.com. You can find him at www.DavidFleck.com.