Today’s technologically advanced world has improved the convenience and ease in which many actions and transactions are conducted. Unfortunately, it has also increased opportunities for hackers and identity thieves to commit scams and fraudulent crimes, and real estate transactions are no exception.
In fact, real estate transactions are often a favorite target of criminals because they contain both plentiful personal information and large sums of money. A number of scams persist in real estate, including home title fraud, rental fraud, wire transfer scams, and identity theft. And while many of the victims are consumers, real estate professionals, lenders, banks and title companies must also be constantly vigilant and aware of the security risks.
That’s because in recent years, the real estate sector has seen some of the largest occurrences of malware events than any other industry. Malware is a sophisticated piece of software that hackers use to gain access to individual computers and accounts. Victims often unknowingly download malware, allowing hackers to gain access to a computer. Some types of malware can let a hacker see every single keystroke a person makes, providing them with usernames and passwords to personal accounts.
How Identity Theft Occurs in Real Estate Transactions
Identity theft via a real estate transaction doesn’t occur in a single moment. It begins with a scammer somehow gaining access to your computer, your email, or other accounts via malware or spyware. This is typically done through a phishing email or other unscrupulous method that leaves the victim completely unaware.
Once access is achieved, the identity thief can then monitor email interactions between the buyers or sellers and attorneys, real estate professionals, lenders, and anyone else involved in the real estate transaction. The information contained in these emails can include names and addresses, social security numbers, and banking and financial information — everything an identity thief needs to commit a number of fraudulent crimes.
Identity Theft and Mortgage Fraud
Identity theft through a real estate transaction can cause a multitude of devastating financial problems for the victim. With all the important details and personal information in hand, and identity thief can commit mortgage fraud — applying for mortgages using someone else’s name. The thief can take out lines of equity on the victim’s current home, purchase new homes and refinance them, take out loans against the house, or even seize the victim’s home via a fraudulent deed transfer.
Real Estate Broker Identity Theft
While many instances of real estate transaction identity theft involves impersonating a buyer or seller, some identity thieves seek to steal the identity of real estate brokers.
An identity thief that manages to impersonate a real estate broker or agent by using his or her name, license number, and other credentials can trick unsuspecting consumers into parting with money in the form of “fees” for a real estate transaction, and then will never be seen again.
Title Company Identity Theft
Also steadily increasing is LLC identity theft — the theft of an actual business identity. Title companies are targeted so that cybercriminals can unscrupulously acquire properties that are being foreclosed or are in default, with the intention of then reselling or refinancing the property.
With enough sensitive information, a cybercriminal can effectively act as the owner or manager of a title company and sell property using the company’s credentials, pocketing the cash and walking away.
How to Protect Yourself From Identity Theft in Real Estate Transactions
Buyers and sellers are not the only targets of identity thieves and hackers. Cybercriminals often target employees at real estate brokerages and title companies as well. That’s why all staff should be fully trained on how to protect sensitive data and reduce the risk of an identity thief gaining access to a network.
Keep Software Up to Date
Software and system updates often contain important security patches that eliminate accidental openings in the software that hackers can attempt to exploit. By always keeping software up to date, it makes it harder for cybercriminals to access a network.
Use Virus Protection Software and a Firewall
Both a firewall and virus protection applications act as deterrents to hackers, and can often detect malware or spyware that is attempting to infiltrate a computer system or network. As with other computer software, it is also important to keep virus protection software up to date too. Hackers are always working to figure out how to circumvent a network’s protection, and the updates ensure that the software is equipped to detect and block new threats.
Use Strong Passwords and Two-Factor Authentication
Many data breaches occur simply because of weak passwords. Strong passwords that consist of random upper and lowercase letters, numbers, and special characters, are much more difficult to acquire.
Additionally, two-factor authentication (2FA) acts as a major deterrent to cybercriminals. It is a type of password protection that prevents a person from accessing an account unless they also enter a second piece of information in addition to a password. This usually entails a numbered passcode sent to a person’s email or mobile device. 2FA is available now for almost every major business or website, and should definitely be utilized by those conducting real estate transactions.
Educate Employees
Staff at real estate brokerages, title companies, and other related businesses must also be educated about cybercrime and real estate fraud, and be taught how to minimize the risk of a data breach. Staff should be trained to follow a strict set of cybersecurity protocols, such as no unauthorized downloads, no unauthorized website browsing, and, most importantly, avoid opening emails or clicking on links in emails from untrusted sources.
The above are the most common ways in which identity thieves succeed in getting someone to unknowingly download malware onto their computer. Phishing emails are especially common, and over the years have resulted in an increasing number of data breaches in the real estate industry.
As a result, thousands of people suffered total losses of over $50 million each year over the last few years. Mortgage fraud risks are also steadily increasing, with nearly one out of every 100 applications being fraudulent.
To further decrease the risk of identity theft and reduce wire fraud in real estate transactions, consider utilizing Paymints.io, a fully electronic, secure, and compliant money transfer platform that eliminates the need for borrowers, buyers, sellers, and real estate agents to write paper checks.
Not only is this a safer way for all parties to conduct business, but it also saves both time and money, as well as the environment by eliminating the use of paper and reducing CO2 emissions.
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