The real estate industry has been a fertile sector for online fraudsters for a decade or more – and recent research says the scams have increased exponentially.
In a public service announcement released on July 12, the FBI Internet Crime Complaint Center (IC3) reported that the real estate industry has become especially susceptible to business email compromises (BECs) and email account compromises (EACs).
The attacks impact all levels of the industry, including title companies, law firms, real estate agents, and home buyers and sellers. In the past year, the highest victim losses reported in one month came in September 2017 at $18 million.
Meanwhile, new research from Proofpoint underscores the threats to the real estate industry. "The fraudsters prey on people's good nature and desire to get business done," says Sherrod DeGrippo, director, emerging threats at Proofpoint, which published a blog last week that outlines the major security threats facing the real estate industry.
DeGrippo adds that real estate transactions typically include electronic signatures, countless exchanges of documents via email, and a variety of interactions with potentially unfamiliar contacts. And, of course, there's also a lot of money involved.
"When a real estate person holds a 20% down payment, that can be thousands, possibly millions of dollars," DeGrippo points out.
Jessica Edgerton, executive vice president of operations and corporate counsel at Leading Real Estate Companies of the World, says the real estate industry has been fighting these battles for many years.
"Part of the problem is that the modern real-estate deal is a complex transaction involving a large number of number of parties, all of whom are sending sensitive information via electronic means," Edgerton says. "More players and more electronic communications mean more potential holes for the fraudsters to sneak in. And the stakes are high. A home is the biggest purchase of most people’' lives.
"Down payments are significant chunks of money, so real estate-targeted wire fraud is a lucrative business, there's no doubt about it," she says.
Proofpoint's DeGrippo says the five top threats the real estate industry and potential home buyers face are:
Gad Naveh, advanced threat prevention evangelist at CheckPoint Software Technologies, says real estate companies should start by keeping their business employees aware of the fraud problem in the real estate industry.
"Companies also need to have protection at their endpoints," Naveh says. "There are ways today to recognize if people are reusing their passwords. Companies can use tools to set policies for their business users not to reuse the passwords."
Brokerages should consider educating sales agents and office managers about cybersecurity best practices, Edgerton says, and that agents should educate home buyers about the potential for transaction-based fraud. And home buyers should always pick up the phone and call the real estate office before wiring money to verify that the instructions are correct.
"Legitimate businesses are not going to send home buyers a link to verify their credentials," she says.
As for the ongoing DocuSign scam in which home buyers are being lured to click on websites with fake DocuSign logos, she says unless users are absolutely sure of the sender, "don't click on anything in a notification email. Instead, go to the DocuSign website and click on the 'access documents' link in the top right corner. You can enter the code you received there without risk."
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Steve Zurier has more than 30 years of journalism and publishing experience, most of the last 24 of which were spent covering networking and security technology. Steve is based in Columbia, Md. View Full Bio