After a string of high-profile breaches of the national Property Exchange Australia (PEXA) security protocols, an international insurance broker has warned against a potential cyber security crisis in the real estate sector.
One such case involved a former MasterChef finalist who lost $250,000 from the settlement of her Melbourne house to cyber criminals, who set up third-party accounts to breach PEXA. Although the bank was able to freeze $138,000 of the funds, the rest was non-recoverable, jeopardising her family's planned move to Mornington Peninsula.
Gallagher said the increasing cyber threat faced by the real estate sector is driven by Australia's transition to an electronic system of exchanging property, as well as the rise in cyber criminal targetting residential property transactions.
Australia is transitioning from the 150-year-old paper-based Torrens Title System of exchanging property to electronic certificates, which will become mandatory in VIC in October 2018, and in NSW in July 2019.
Business technology news website ZDS noted an increase in daily cyber threats to real estate agents, with more cyber criminals targeting residential property transactions by hacking into agents’ email accounts and providing altered bank account details to allocate funds to fraudulent accounts.
“We have thousands of real estate agent clients across Australia and we’ve certainly noticed increasing incidences of cyber-related claims being made against them,” said John Apter, a specialist real estate insurance broker from Gallagher. “Phishing emails have become a daily challenge for most agencies, as fraudulent emails blend in with high volumes of online queries. These constant attacks inevitably lead to human error, such as clicking a link in an unsolicited email and releasing malware or a Trojan virus into the business network. This is incredibly easy to do, but can be extremely disruptive to business operations, and can be costly in terms of lost revenue brought about by an inability to trade. We’ve also seen examples of ‘social engineering’, whereby fraudsters access agency owners’ email accounts and issue false invoices to colleagues urging immediate payment, with money being directed to fraudulent accounts. This threat is certainly on the increase, so real estate agents should be extremely wary.”
Apter urged real estate business to educate their staff about the growing risk of cyber security breaches, as well as on what to do in the event of a breach.
“Cyber insurance should also be considered as part of your overall approach to cyber security,” Apter said. “It’s a highly relevant and cost-effective product, which addresses a very real and growing threat. It won’t in itself stop breaches from happening, but can help compensate your business for any lost income brought about by cyber attacks, or liability costs related to loss of customer data.”
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