During REALTOR® Safety Month in September, most brokers’ thoughts turn to personal safety—for everyone in your office, including your clients. While safety from physical harm is certainly the highest priority, it’s also essential to recognize that personal harm is more than physical, especially in today’s digital world.
Internet criminals’ nefarious activities take many different forms, including real estate wire fraud. Even though this scheme has been widely reported since it first surfaced in 2015, victims are still falling prey on a regular basis, making it one of the worst security issues in the industry.
How does it work? First, the criminal gains access to the email account of one of the parties to a real estate transaction and follows the communications between these parties.
Then, as closing approaches, the criminal sends an official-looking email to the buyers, directing them to wire their down payment to the criminal’s account. The criminal’s message may come from the hijacked account or from a “spoofed” account using an email address that’s deceptively similar to a legitimate party to the transaction. Buyers may be easily fooled into thinking the message is legitimate.
Learning that your client, or one of your agents’ clients, has lost their down payment in a wire fraud scheme rates high on the “bad news” list. Not only has your client been severely harmed, but your office will likely bear the brunt of widespread negative publicity, or worse. What steps can you take to prevent this scenario from occurring?
- Protect your email account. It’s essential to use a strong, unique password that’s changed periodically. In addition to using solid antivirus software, be sure to keep all your programs up-to-date to reduce the risk of malicious code infecting your system and capturing sensitive information. Avoid public WiFi and always think before you click on a link—whether it’s embedded in a phishing email, or it’s clickbait on a website or social media post.
- Use encryption tools. Standard email should never be used to send sensitive information, including financial data, contracts, wiring instructions, etc. Instead, use encrypted email, a secure document-sharing platform or a secure transaction-management platform in conjunction with personal phone calls to the client.
- Talk to your clients. Knowledge is another powerful weapon against internet criminals. Tell every client about real estate wire fraud—how it occurs and what steps you (and they) need to take to prevent it. You may also want to have clients read and sign a notice regarding the possibility of cybercrime hitting the transaction.
- Consider insuring against cyber risks. In the event of a breach, it’s important to recognize that your firm could be subject to a liability claim if investigators find that access was gained through your company’s email account. To minimize losses, you may want to add cyber liability to your standard errors and omissions (E&O) insurance policy.
Deterring real estate wire fraud and other types of cybercrime doesn’t have to be expensive, but it does require knowledge and vigilance on multiple fronts—not just during REALTOR® Safety Month, but every day of the year.
Marc D. Gould is vice president, Business Specialties, for NAR and executive director of REBAC. A wholly-owned subsidiary of NAR, The Real Estate Buyer’s Agent Council (REBAC) is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. With more than 30,000 active members, REBAC awards the Accredited Buyer’s Representative (ABR®) designation to REALTORS® who work directly with buyer-clients.
For more information, please visit REBAC.net.
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