Cybercrime against large retailers like Target and Home Depot has cost these companies millions in damages. Now cybercriminals are targeting the real estate industry.
According to Jessica Edgerton, associate counsel for the National Association of Realtors, many real estate businesses are smaller operations, “so they don’t really consider themselves to be targets.” But without the latest technology or budgets to improve their security, smaller real estate businesses may be even more at risk. With the wealth of personal data exchanged during real estate searches and transactions, buyers and professionals need to take caution to avoid becoming a cybercrime victim.
A rising threat
The scam known as phishing—being lured into giving up sensitive information under false pretenses—has long been a tactic of cyberthieves, but now it’s being used against real estate professionals and homebuyers.
“What will happen is an online criminal will break into the email account of someone involved in a real estate transaction,” Edgerton says. “They’ll hack into the account and monitor [it] as transaction information comes through.”
This personal information allows the criminals to create authentic-looking emails that they then send to the homebuyers, either from the hacked email account or one designed to look like it’s coming from the real estate professional.
“This mocked-up email to the buyer says, ‘There has been a last-minute change to the wiring instructions’,” Edgerton says, and the scam email instructs them to send the money for a down payment or other amount to a new account, enabling the criminal to steal the funds.
And because the emails are so convincing, this scam often works. “They’ll wire the money and the money will disappear,” Edgerton says. “We’re seeing devastating results.”
Spotting the signs of a Cybercrime
Being aware of how this attack can happen may help you spot it, but there are plenty of other red flags to watch for during a real estate transaction.
Receiving news of a sudden change in plans regarding your closing or mortgage payments is cause for alarm, so if this occurs, reach out to your real estate broker or mortgage lender or closing agent before finalizing the transaction. The way you communicate, however, is also important. According to Edgerton, the phony message may come from either a real, hacked email account or one with slight differences in the address, such as an ‘r’ and an ‘n’ side-by-side to replace an ‘m’ in the address.
Edgerton also says scammers may change the phone number included in the email so that you call them instead of your professional. Scrutinize the contact information in these messages and, if you notice anything suspicious, use another method to contact your professional—ideally face-to-face—and question him or her about the message.
As with other scams, a sense of urgency is also a sign that you may be dealing with a thief.
Making a plan
Once you’re aware of this potential risk, work it into your homebuying plans to help better protect your money.
“Make sure that all of the people who will be involved in the transaction are using reasonable safety measures and that everyone will be in agreement about how communication will take place,” Edgerton says. Avoid sending sensitive information or funds over Wi-Fi or unencrypted email. And set a plan for how you’ll send money or sensitive data.
“Say, ‘I’m only going to be communicating financial information face-to-face’,” Edgerton says. This way, if you receive a message asking you to wire money, you’ll know there is a problem.
If you do fall victim to this attack, notify the police, your financial institution, and your real estate professional immediately to attempt to halt the money transfer and stop any further attempts at fraud. Also be sure to report the fraud to each of the three major credit reporting agencies (CRAs).
You’ll also want to change your passwords and encourage your real estate professional to do the same. In fact, before working with a professional, you may want to ask about his or her cybersecurity practices and be sure you are comfortable with those policies.
“When you’re a small shop dealing with relatively large financial transactions, these scammers know that you don’t have the money to devote to IT and [that] there could be holes,” Edgerton says.
If you suspect anything suspicious while buying a home, take a moment to consider these threats and contact your professional before sending money or personal information.