Social engineering fraud, one form of cyber crime, is particularly rampant in the real estate industry, and the industry has responded with warnings and IT security recommendations that can be effective for both real estate organizations and for businesses outside of the real estate industry – along with comprehensive Cyber Risk Insurance (also called Data Breach, Privacy and Network Security insurance coverage). A range of suggestions and resources are noted below, and you might also want to review our prior posts which include recommendations for and links to IT security measures (see here, here, here & here).
Sometimes the simplest steps can be quite effective:
- Use checks – fraudulent cyber attacks are hard to make work with an old fashioned check.
- Use the phone – but to a phone number that is known to be correct, not from an incoming call or a recent email that might be deceptive.
The National Association of Realtors has information on its website which may be helpful to any organization involved in the transfer of money (see here, here, here & here). The information includes suggestions involving email, password and document communication security measures, and recommends comprehensive Cyber Risk Insurance. One article notes that phishing accounts for 95% of cyber threats, and another notes that about 25% of users open suspicious emails and 11% open attachments or click on links in those emails. Another suggestion is to educate clients and set expectations concerning funds transfer instructions.
Another recommendation is to have an established process for the organization as noted in this article (here):
- put consumer warnings on websites and communications
- use secure email communications
- send notices to consumers and real estate agents informing them that the title companies’ wire instructions will never change during the transaction
- call homebuyers and real estate agents on a known number to verify wire instructions before transmitting
- Verify account holder information with the receiving bank prior to submitting a wire transfer
The American Land Title Association has developed a video entitled Protect Your Money from Wire Fraud Schemes When Buying a Home (here), and recommends its members use this video to warn consumers about wire fraud.
And what to do if a scammer strikes? An article (here) from The National Association of Realtors suggests that there are not a lot of options. It recommends asking your bank for a wire recall immediately and reporting the fraud to the authorities.
In addition to communicating with clients and strong IT security, Cyber Risk Insurance is an important financial protection against hacking attacks. Coverages vary widely, but comprehensive Cyber Risk Insurance policy forms are available that include coverage for loss of money and social engineering fraud.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability and specialty insurance (E&O, D&O, EPL, Cyber Risk, Specialty). Cyber Risk Insurance is our specialty, and we excel at hard to place accounts.
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