From listings to losses: understanding cybersecurity risks in real estate | Dunlap Bennett & Ludwig PLLC

Your real estate company is exposed to the growing threat of cybersecurity attacks. The days of keeping hard copies and physical files are increasingly over. In an era where digital transformation is changing the industry landscape, real estate companies are becoming increasingly vulnerable to cybersecurity threats due to the sensitive information they maintain. As businesses adopt digital solutions to streamline operations, close transactions faster, and improve customer experience to make it easier to streamline operations, this also makes them prime targets for cybercriminals. As the frequency and sophistication of cyberattacks increase, real estate companies and professionals must understand the risks and implement robust security measures to protect against the growing threat of cybercrime.

Cybersecurity Threats Facing Real Estate Companies

Real estate companies are particularly vulnerable to various cybersecurity threats due to the sensitive nature of the information they manage. From phishing attacks and social engineering to data breaches and ransomware, it’s important to be aware of the most common cybersecurity threats your real estate company may face.

Phishing attacks

Phishing remains one of the most widespread threats facing real estate professionals and companies. Cybercriminals use deceptive emails or messages to trick individuals into disclosing sensitive information such as login credentials and/or financial information. It is increasingly common to receive emails or messages from attackers posing as “trusted colleagues” or “trusted customers” requesting immediate action on an urgent issue.

Social engineering

Similar to “phishing” attempts, social engineering tactics involve manipulating individuals into disclosing confidential information. In the real estate industry, attackers can impersonate clients or colleagues through phone calls, emails, or other forms of communication to establish trust and gain access to sensitive data or financial resources.

Data breaches and ransomware

Data breaches are also common when unauthorized parties access confidential information, such as personally identifying details, financial records and/or transaction histories. Additionally, ransomware attacks that hold encrypted company data hostage are quickly becoming a pervasive threat. There were nearly 318 million ransomware attacks in 2023 alone, and researchers estimate that these attacks will increase to one attack every two seconds by 2031.(1) With real estate companies retaining a significant amount of Sensitive data are prime targets for such attacks.

Considering current threats and future predictions, it is essential that your real estate company prioritizes this threat. Cybercriminals will go to endless lengths to gain unauthorized access to your personal and sensitive information. You must be ready for the attack.

How Cybersecurity Attacks Affect Real Estate Transactions

Cybersecurity threats pose a significant risk to real estate transactions, with significant implications for a real estate company’s financial stability, reputation and legal compliance.

The financial repercussions can be catastrophic, as businesses face the costs of ransoms, data breach repairs, potential regulatory fines, legal fees, and lost business opportunities. Such attacks can be economically devastating for large companies and catastrophic for small businesses.

Exposing sensitive and secure information can lead to serious legal consequences, class action lawsuits, data loss, compliance issues, and financial fraud, to name a few. Ransomware incidents stifle operations, leading to significant financial losses and downtime. On September 12, 2023, MGM Resorts confirmed that it suffered a ransomware attack that forced the shutdown of several operational systems, amounting to $100 million in losses according to SEC filings.(2 )

Beyond immediate monetary losses, a cybersecurity incident can also damage a company’s reputation, as trust is essential in real estate transactions. Clients provide personal and financial records throughout the real estate transaction, which pass through financial institutions and brokers to finalize transactions. Any breach of customer data and/or disruption of services may result in negative publicity, delay in transaction processing, decline in customer base and/or refusal of lenders and financial institutions to work with the breached business. breach. In this environment, prioritizing cybersecurity is not just a technical necessity but an essential part of maintaining financial health, customer trust and compliance with regulations.

Best Practices for Improving Cybersecurity in Real Estate

Considering the cybersecurity threats facing real estate companies and their clients, it is important to highlight the mitigation strategies that real estate companies and individuals should apply to avoid such threats. As the most practical strategy, training employees on cybersecurity best practices is essential. The recommendations include the following:

• Employee training is essential to maintaining strong cybersecurity. Businesses should conduct regular training sessions with employees and agents to help them understand how to: 1) operate securely online, 2) identify and avoid cyber threats, and 3) manage and secure sensitive information.
• Using encrypted communication methods and strong multi-factor authentication measures for information sharing can also help protect against unauthorized access and add an additional layer of security for attackers attempting to gain such access.
• Ensuring regular software updates, regularly backing up data and establishing recovery plans further addresses vulnerabilities that could be exploited by attackers.
• Developing and enforcing clear policies as well as executing robust security protocols are also important to combat existing risks and can defend against future threats.
• Along with these best practices, it is essential to ensure business preparedness by establishing a robust incident response plan to execute in the event of a cyberattack.

Conclusion

As real estate companies continue to adopt digital solutions, the importance of cybersecurity cannot be overstated. By understanding threats and implementing best practices, businesses can protect their operations, safeguard customer information, and maintain their reputation in an increasingly digital world. Caution, awareness and proactive measures are essential to navigating the complex cybersecurity landscape in real estate.

(1) Number of ransomware attempts per year 2023 | Statist

(2) MGM faces $100 million loss following ransomware attack | Technological target

(See source.)