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How hackers are damaging real estate professionals’ reputations, how you must respond

(BROKERAGE OPERATIONS) Hackers are directly impacting the industry’s reputation, which can do so much more to react and safeguard their businesses and more importantly, clients.

There has been an ever-increasing rise in real estate wire fraud, and the articles being published about it in the mainstream press threaten the reputation of all real estate professionals as a category.

The Federal Trade Commission describes the problem thus:
Hackers have been breaking into some consumers’ and real estate professionals’ email accounts to get information about upcoming real estate transactions. After figuring out the closing dates, the hacker sends an email to the buyer, posing as the real estate professional or title company. The bogus email says there has been a last minute change to the wiring instructions, and tells the buyer to wire closing costs to a different account. But it’s the scammer’s account. If the buyer takes the bait, their bank account could be cleared out in a matter of minutes. Often, that’s money the buyer will never see again.

But there’s a lot more to the scam than that

There are many other ways that hackers can involve themselves in communications, including various ways of tricking the real estate professional into installing malicious software on their computer.

There have also been cases where instructions for escrow or other disbursements have been changed at the office of the real estate professional – and this occurs not only via email but by less sophisticated methods, including phone, fax, or even inter-office memo.

Some wrongly think they’ve done enough

Some real estate professionals consider themselves ‘covered’ because they have started using a disclosure form for their clients – but again, the client-facing aspect of the wire fraud scam is just one part of the problem, and having a client sign a one-page paper when they are signing so many other things is going to have limited practical effectiveness.

Much more is needed: a company policy and amendments to contracts, training for employees and contractors, compliance checking, ongoing reminders to everyone involved via emails, flyers, and in e-mail signatures – and more.

Clareity Consulting has written a paper that more thoroughly explains the wire fraud issue and provides concrete guidance on how to reduce the risk. It includes examples of steps taken by franchises, brokers, title companies, and attorneys, as well as a draft company policy focusing on wire fraud. It is available in full here in PDF form: Reducing the Risk of Real Estate Wire Fraud.

The Real Daily has no financial relationship with Clareity Consulting or Matt Cohen who is a volunteer editorialist.

#REwirefraud

Written By

Matt Cohen has been with Clareity Consulting for over 17 years, consulting for many of the real estate industry’s top Associations, MLSs, franchises, large brokerages and technology companies. Many clients look to Matt for help with system selection and negotiation. Technology providers look to Matt for assistance with product planning, software design, quality assurance, usability, and information security assessments. Matt has spoken at many industry events, has been published as an author in Stefan Swanepoel’s “Trends” report and many other publications, and has been honored by Inman News, being listed as one of the 100 Most Influential Real Estate Leaders.

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