MAIN IMAGE: Jackie Smith, Head of Buyers Trust
As technology evolves, so do scams, Jackie Smith, Head of Buyers Trust, a subsidiary of ooba Group which provides a safe and secure bank-hosted deposit solution for homebuyers, explains that with the growth of internet sites such as Property 24 and Facebook Marketplace, “These scams often involve fraudsters posing as legitimate property owners or real estate agents and using online platforms to advertise properties that do not exist or are not available to rent or purchase.”
As legitimate agents it is important to understand these scams, and to be able to not just reassure prospective clients of the proper process, but also to be able to advise them about the risks out there.
Common digital scams include fake listings, phishing scams, and identity theft.
- Fake rental listings and agents
“In this instance, fraudsters will advertise a rental listing online (often at a very attractive rate) and wait for a would-be tenant to make contact. They will make excuses for why the property cannot be viewed in person but emphasise that there is lots of interest and ask the tenant to pay a small deposit or application fee to secure their place, before taking the listing offline and disappearing with the money”.
“This may sound far-fetched, but in a highly competitive rental market such as Cape Town, some tenants are willing to do anything to find a well-priced home, including handing over money before seeing a property,” says Smith.
Agents are encouraged to display their Fidelity Fund Certificates, proving their registration with the Estate Agency Affairs Board.
- Phishing scams
In this form of cybercrime, fraudsters will intercept emails between a buyer and seller to pose as a legitimate real estate agent or conveyancing attorney to divert the buyer’s deposit into their own bank account.
“As a service provider tasked with safeguarding deposits, we’ve seen how increasingly common this crime has become, with even the most digitally savvy buyers being defrauded of huge sums,” Smith explains. She cites a recent case where law firm ENS Africa was ordered to pay R5.5 million to a client using their trust account for her home deposit; this client fell victim to a phishing attack orchestrated by someone posing as one of the firm’s employees”.
Smith’s advice on avoiding these kinds of scams applies to estate agents and clients alike:
- Be vigilant about opening any emails you receive and don’t open any suspicious links or attachments.
- Validate any banking details from the bank in question before making a deposit.
- Always confirm with your Agent before making any deposits. This confirmation should be in person or over the phone as using email could allow a criminal to continue the interception.
- Make sure that you keep your devices up to date with anti-malware software and that you choose strong passwords which are not easy for an attacker to guess.
- Only connect to private Wi-Fi networks that you know and can trust.
- Consider using an alternative to the traditional depositing of cash into a trust account, to secure your purchase. Buyers Trust comes with a Bank Guarantee and provides a safe platform for deposit transactions, that will protect you against the risk of phishing or other such cybercrimes.
Are you Sharing Sensitive Information Via Unprotected Emails?
Smith’s tips would have come in handy in the recent case of Hawarden v Edward Nathan Sonnenberg as Cari du Preez explains on behalf of VOASA:
In the recent case of Hayward v Edward Nathan Sonnenberg (ENS) dealt with a firm of attorneys who sent unprotected statements via email. Hayward purchased a property and ENS was appointed as conveyancing attorneys and sent the request for payment with their bank details to Hayward via unprotected email. Du Preez explain that this email was the intercepted (on the client’s side) and the bank details changed, resulting in Hayward paying R5,5 million into a hacker’s bank account.
The Attorneys obviously denied wrongdoing and the matter proceeded to court with Hayward claiming damages. The court held that the firm owed the client a duty of care and should have been aware of the risk of interception and should therefore have implemented appropriate safeguards, especially since solutions are readily available. The judge ruled that the firm therefore acted negligently and ordered ENS to pay R5,5 million to Hayward and to cover her legal costs.
This judgment is relevant to property practitioners, firstly, from a risk perspective to those who share banking details via unprotected email and secondly, because it gives interpretation to the Protection of Personal Information Act. Principle 7 of POPI deals with security safeguards and provides that the responsible party must ensure that the integrity of personal information in its control is secured through technical and organisational measures. This includes e-mail security and security on laptops, endpoints, servers and mobile devices, to control access to information and prevent data loss.
- Identifying false buyers
Avenir Properties highlights the risk of false buyers who fake interest in a property, putting in an offer to purchase, and then sending the seller a document which they claim will help them get a home loan approved. Shortly thereafter sellers find a third party is claiming to have bought the property.
The company lists a few warning signs:
- The buyer makes a cash offer to purchase the property,
- The buyer is willing to make a full price offer on the property,
- The buyer shows interest in multiple properties at the same time,
- The buyer expresses urgency to conclude the sale of the property.
While these signs are not necessarily problematic in isolation, a combination of them could point to a fraudulent buyer. Agents can play a vital role in protecting sellers by performing thorough checks on prospective buyers and introducing sellers to professional conveyancers to assist with the necessary documentation.
Avoiding scams
Smith believes that the two golden rules when it comes to avoiding these scenarios are to avoid giving out personal information to non-verified sources and to be extra careful with money transfers.
“To avoid falling victim to a property scam, it is crucial to be cautious when dealing with unfamiliar real estate agents or property developers and to thoroughly research any property investment opportunities before handing over any money. Opting for a bank guarantee rather than a cash deposit or EFT is another way to verify the transaction and ensure its safety until you have keys in hand,” says Smith.
Agents, on the other hand are encouraged to ensure that their digital communications are secure – specifically when dealing with financial information as they could be held liable for the financial loss resulting from a phishing scam.
“Remember, the best defence against scams is to be knowledgeable about their methods and trust your instincts – if you’re unsure about a situation or offer say no,” Smith concludes.
