The advent of automation in the title industry has brought with it welcome changes. Increased speed of communication, fewer human errors, and movement towards paperless closings, have created new standards and improved customer service. While it is imperative to implement technology that enables us to meet these higher expectations, it comes with a unique set of risks.
The extensive amount of NPI (non-public information) collected for each transaction has moved from traditional file cabinets to digital space shared by cyber criminals. Protecting customer information should always be a top priority. In fact, all financial institutions are mandated to protect NPI.
Why Do Cybercriminals Love the Real Estate Industry?
For today’s sophisticated cybercriminals, real estate transactions appear as the lowest-hanging fruit. Prior to a cyber attack, the groups perform extensive research on their targets and are particularly interested in companies that are most vulnerable, who fail to modernize their cybersecurity policies and strategies in line with the latest security standards. Generally speaking, the real estate industry is filled with people who are not too savvy about cybersecurity, thus finding themselves victim of successful cyberattacks.
Once cybercriminals detect a weak IT infrastructure, they go after the most priceless asset in today’s digital world: DATA. Personally identifiable and financially sensitive data are a gold mine for cybercriminals. They can use it to engage in a wide range of crimes such as blackmailing, extortion, and identity theft.
Lenders, title companies, and escrow agencies and even real estate lawyers are rich sources of such data. They store and exchange both personal and financial data, including names, addresses, social security numbers, bank accounts, and credit card numbers. As a result, cybercriminals end up with large amounts of profit with only a handful of successful attacks.
Lastly, huge fund transfers are processed every second in the real estate sector. Therefore, hackers find it tempting to invade their systems and divert the destination of these funds to their own accounts.
Cyber Threats
Phishing Scams are the most common way hackers obtain information. Phishing is an electronic attempt to acquire NPI by pretending to be a familiar or trustworthy source. We see these every day from people claiming to be your bank, car loan company or other financial institution stating that your account has been compromised and that you need to click a link to change your log in information. Once on the phony site, they collect that information to use at a later time. Sometimes simply opening the email allows cybercriminals to infiltrate the system causing a data breech, or implant software which locks down the system followed by a ransom demand.
This is particularly threatening in a business that handles commercial and residential transactions. Information such as social security numbers, bank routing numbers, passwords, and credit card details are all examples of information typically entrusted to the settlement agent. Identifying scams and taking measures to stop them has become part of our daily routine.
Wire Transfer Fraud has quickly become the most potentially devastating phishing scam affecting the title industry. In the case of wire fraud, the hacker obtains enough NPI and company information to pose as someone recognizable involved in a closing. The client, usually the buyer, is contacted electronically and told there “has been a change in their wiring instructions” or “please send the following amount by wire ahead of the closing”. The wire transfer information is fraudulent and, if sent, the money can be lost. Unfortunately, these scams have had a lot of success.
Ransomware is not merely a cyberattack. It is a full-fledged dark industry that utilizes a type of malware from cryptovirology that threatens to publish the victim’s data or perpetually block access to it unless a ransom is paid. In a ransomware attack, a cybercriminal group gains illegal access to the private digital network of a company via an attack vector.
Subsequently, the malware takes control of the operating system, disables anti-malware tools, and scrambles all the data stored in the hard disk. The victim is then asked to pay a ransom for unscrambling the data. With the many companies running outdated systems with known security holes, it is no surprise that the industry is a frequent target of ransomware attacks. Worst of all, because ransomware is run by criminals, even if you pay the ransom there is no guarantee you will get your data back.
Preventing Cyber Scams
A complete risk management program includes determining digital assets such as NPI on clients, analyzing the threats represented by each, developing an appropriate security program for each threat within the company size and ability, monitoring and reporting.
Implementing a comprehensive risk management program takes a considerable amount of time and resources. To reduce your vulnerability immediately, consider taking these measures:
- Teach staff how to spot fraudulent emails. Confirm that email addresses are legitimate. Check for minor changes that mimic legitimate email addresses.
- Communicate potential risks to clients
- Know your customer. Be aware of your client’s typical transfer activity and question any variations
- Instruct all parties of a transaction to call before sending any wires, and to verbally confirm any email requesting NPI
- Change Passwords Regularly
Final Thoughts
It is not likely that these hackers are not going to stop anytime soon and will eventually raise their game to a new level. A cyber invasion of a company does not only impact their financial security, but it also damages their reputation. Therefore, stakeholders in the real estate industry must take matters into their hands, protecting themselves before the inevitable attack comes.
On an independent level, companies must upgrade their IT infrastructure by staying up to date with the latest versions of the operating systems and application software. Similarly, they must embrace modern cybersecurity measures like two-factor authentication, encryption, etc.
WHY CHOOSE CITRUS HERITAGE ESCROW?
When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.
Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200