Protecting potential victims from fraud is in the spotlight as many people are unaware of the dangers they face daily when transacting and communicating online.
Having increased by over 300% during the pandemic, cybercrime is fast becoming one of the biggest threats to businesses globally – and the real estate industry is no exception, says Jackie Smith, head of Buyers Trust – a subsidiary of Ooba Group.
Every 32 seconds, a hacker defrauds someone online. This equates to cybercrimes being committed around 2,244 times each day, with small businesses highlighted as the most vulnerable to these attacks.
Smith believes that these statistics are set to worsen. “Unfortunately, it is only going to get worse as criminals become more sophisticated and people continue to work from home, leaving them without the advanced protection of their workplace’s internal security infrastructure.”
“We are particularly concerned about the impact that this type of crime – particularly phishing scams – will have on the local property industry, where many real estate agents work from home or on-the-go.”
Smith said that once an offer to purchase has been signed and the bank has approved a home loan, the property transfer process can commence. “Estate agents or conveyancing attorneys are responsible for handling the homebuyer’s deposit and have limited security measures in place to protect these hefty transactions,” she said.
“We have heard of various incidents where buyers lost their deposits due to phishing scams. This ultimately derailed their dreams of homeownership because of poorly-secured deposit hosting.”
Email communications leave agents vulnerable to phishing
Smith said that the most common type of cybercrime experienced by estate agents is phishing: a cybercrime perpetrated by persons or groups who contact potential victims posing as legitimate institutions to lure them into providing private data, such as banking and credit card details, passwords, or personal identification information.
“These types of crime commonly and easily occur when e-mail records between the agent, buyer, and the respective lawyers to whom the deposit is paid are intercepted and ultimately, ‘phished’,” she said.
Cybercriminals will hack into the title company or real estate’s system to study the language used, the format of the information, and the transactions, to ensure they appear informed and legitimate to commit convincing fraud.
Can you afford to risk it?
Recognising the need to bring South Africa up to international best practice in the fight against cybercrime, the president recently signed the Cybercrimes Act into law.
While this act aims to provide greater protections for potential victims and stronger consequences for cybercrime perpetrators, it also means that estate agents who fall for phishing scams may be seen as unwitting accomplices to the crime and therefore held liable.
“Estate agents need to be aware that they are taking on a huge legal responsibility when accepting a deposit from a homebuyer. In fact, they could be held liable if this money is lost because of their failure to implement the necessary security protocols,” said Smith.
Smith explains that for estate agents and homebuyers to protect themselves and the security of the deposit, they have two options.
“The first is to follow best-practice security protocol. This should include not sending banking details over email, using strong passwords, not opening suspicious-looking links, calling the agent or buyer to confirm that email communications have in fact come from them, not conducting financial transactions over open WiFi networks and ensuring that you have the latest anti-virus and malware software installed on your devices.”
However, even when following the most stringent cyber safety measures, protection against the threat of cybercrime is not 100% guaranteed. According to an IBM study, human error is the main cause of 95% of cybersecurity breaches, and most agents and buyers do not have the professional training needed to spot sophisticated attacks.
For this reason, Smith recommends that homebuyers and estate agents take the ‘human element’ out of the process and instead use a highly secure third-party alternative such as Buyers Trust to safeguard a deposit.
‘Full visibility of the deposit at all times’
“Homebuyers are given a choice to select the financial service provider that they would like to invest their deposit with when signing the offer to purchase,” said Smith. In choosing Buyers Trust, homebuyers have 100% visibility of their deposit at all times including the return on their original investment and the knowledge that the highest level of security measures are in place.”
Buyers Trust works by creating a bank account with some of the country’s major banks in the homebuyer’s name, to which the buyer can directly transfer the deposit, giving them access to a free bank guarantee without the hefty price tag.
“It is not realistic to expect homebuyers or estate agents to turn into cybersecurity experts overnight and with criminals using increasingly sophisticated methods, both parties are left vulnerable. Taking the human element out of this process is the safest way to protect against cybercrime,” Smith said.