Real estate’s susceptibility to data breaches

Cyberattacks are on the rise — is real estate doing enough to protect its clients?

May.May 17, 2021 07:00 AM

(Illustration by The Real Deal)

In 2018, the company that manages the Brooklyn condominium where cybersecurity expert Roman Sannikov lives was hacked.

The hacker locked down the property manager’s IT system and demanded the company pay a ransom to get back in. Sannikov, who leads a team of analysts scouring the dark web for intel on cybercrime and hacktivism, wasn’t personally affected by the breach due to his practice of paying his maintenance fees the old-fashioned way: by check. But as a member of the condo’s board, he had to notify residents and contend with the aftermath of the attack.

He found that many of his neighbors simply shrugged off the news. “People didn’t pay attention to [it] as much as they should have,” he said.

A similar situation is currently playing out on a larger scale following last month’s data breach at Douglas Elliman’s property management arm. The company detected the breach in early April, and subsequently notified residents and employees of the 390 properties it represents that their personal and financial information may have been exposed. Thousands of New Yorkers, many of whom reside in luxury condominiums and white-glove co-op buildings, may have had their data compromised.

But since the breach was revealed, there has been little outrage or concern expressed publicly by those who may have been affected.

Sannikov is just as surprised by that reaction as he was when his building was targeted. Attacks have gotten more dangerous since then, and residents of the well-heeled properties managed by Elliman’s firm face higher risks.

“A breach frequently isn’t the end of malicious activity,” said Sannikov. “It’s just the beginning.”

What’s at stake

In April, over 500 million Facebook users had their dates of birth, phone numbers, employer information and locations hacked. It’s just the latest in a long list of massive data breaches, which often occur years before the affected parties are notified.

For example: Three billion Yahoo users had their personal information exposed in a 2014 breach that the company only acknowledged two years later. The extent of the incident wasn’t fully known until 2017. The same year, hackers — allegedly from the Chinese military — stole information from Equifax, one of America’s largest credit bureaus, including Social Security numbers and birthdates. A year later, hackers who were again allegedly linked to  Chinese intelligence services reportedly stole data on 500 million Marriott International customers as part of a mission to gather intel on U.S. citizens.

Given the frequency of these attacks, many people may be inclined to shrug it off when they find out their information has been compromised.

“It doesn’t feel like a good position to take, but I can also see how people come to that conclusion, at least until there’s some tangible impact on them,” said security developer Troy Hunt, who created Have I Been Pwned, a platform that lets people search to see if their email addresses or phone numbers have been exposed in a breach.

(Click to enlarge)

But some experts say that as data breaches have become more common, cyberattackers have become more enterprising — and the consequences of having your identity stolen or accounts compromised are greater than they used to be.

Back when Sannikov’s condo management company was hacked, for example, the culprits locked down the system and demanded payment, but didn’t steal sensitive information. “Back then it was a little bit less dangerous,” he said.

These days, when cybercriminals get access to data, they are less likely to send a ransom note. There’s a thriving market on the dark web — which Sannikov called a “criminal LexisNexis” — where hackers assemble datasets from multiple breaches, then use that data to apply for loans, file fake tax returns or, increasingly during the pandemic, apply for unemployment insurance.

That information could also be used to launch a phishing attack to gain access to someone’s emails and trick them into transferring funds to the hacker.

Case in point: Last year, Barbara Corcoran, the “Queen of New York Real Estate,” nearly lost about $400,000 in an email wire fraud scam. Posing as Corcoran’s assistant, the attacker requested a payment from her bookkeeper for a renovation at an investment property.

Though Corcoran and her team caught the fraudster, and her bank was able to stop the transfer, the knowledge the attacker had of her business, staff and investments made the scam feel credible.

Corcoran called the scam a “lesson learned” in a tweet at the time. She was not available to comment on the incident for this story.

Real estate companies aren’t targeted more than any other business with an online presence, but many prominent firms and residential brokerages have suffered breaches over the past four years (see sidebar).

Greg Kelley, chief technology officer at cybersecurity firm Vestige Digital Investigations, said companies that aren’t banking institutions may have a “false sense of security,” since they don’t personally have access to money.

But many brokerages and property management companies store personal information that, if breached, could give attackers the tools and opportunity to steal from clients.

Jeremiah Fowler, who specializes in internet security and data protection at Security Discovery, called real estate companies “an extremely valuable target,” due to the size of funds transferred in transactions.

“Where else are you going to get hundreds of thousands of dollars?” he explained. 


Experts say the way real estate firms can reduce the risk of cybersecurity attacks is simple: They should minimize the amount of client or employee data that they store.

“You cannot lose what you cannot have,” said Hunt. “When you start to think that way, it really changes the risk profile.”

Companies could create policies to get rid of data that’s no longer relevant, or reduce the precision of data. For example, instead of asking for date of birth, they could ask for an age range, he explained.

But such an overhaul can cost time and money, and some companies find it easier to maintain the same time-tested policies, particularly when data storage is so cheap. Hunt sees it as the job of regulators to push companies toward better practices.

That’s already happening in New York state: The Stop Hacks and Improve Electronic Data Security Act was signed into law in 2019 and prescribes proactive steps companies must take to protect client and employee data. In April, the New York City Council passed legislation that restricts how landlords and management companies collect and store data related to keyless building entry systems.

Dennis DePaola of Orsid Realty, a property manager with a portfolio of 18,000 apartments throughout New York City, said the state law triggered changes at his firm.

Orsid began using a third-party platform, BoardPackager, to secure communications between prospective buyers and boards at its buildings. DePaola, the firm’s head of compliance, said the company decided to simultaneously revamp its systems to secure remote connections for employees and increase awareness about cybersecurity and safe data practices among staff.

“We knew we would have to come in[to] compliance,” he explained. When the pandemic began, those efforts were ramped up. “Especially in the past year, we’ve really focused a lot of time and attention” on that, he added.

Hunt said planning for the worst-case scenario is key to data security and often comes with a shift, which can be unintuitive, in how companies treat that information.

“Very often the inclination is to collect as much data as possible, and organizations tend to look at the data as being an asset rather than a liability, which is what happens once it gets leaked,” he explained. “The question really should be, ‘What’s the minimum amount of data?’”

    Related Articles

    John Giannone and Jac Credaroli (Credit: iStock)
    Two Elliman agents launch platform to provide renters, buyers and sellers up to $50K in unsecured loans
    Two Elliman agents launch platform to provide renters, buyers and sellers up to $50K in unsecured loans
    Jacob Sudhoff and Scott Durkin (Credit: Sudhoff Companies, Emily Assiran, iStock)
    Douglas Elliman is coming to Texas
    Douglas Elliman is coming to Texas
    Douglas Elliman chairman Howard Lorber (Credit: Getty Images and iStock)
    Elliman’s revenue rose 18%, after sales frenzy to avoid New York’s new transfer tax
    Elliman’s revenue rose 18%, after sales frenzy to avoid New York’s new transfer tax
    Douglas Elliman Chairman and CEO Howard Lorber (Getty Images)
    Sell, sell, sell: Lack of listings dampens Elliman earnings
    Sell, sell, sell: Lack of listings dampens Elliman earnings
    From left: Pamela Liebman and Glenn Kelman (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Corcoran, Redfin)
    Pam Liebman and Glenn Kelman want to buy your house – on TV
    Pam Liebman and Glenn Kelman want to buy your house – on TV
    Paycheck potential: A look at real estate’s top earners
    Paycheck potential: A look at real estate’s top earners
    Paycheck potential: A look at real estate’s top earners
    Contracts, Douglas Elliman, Jonathan Miller, Miller Samuel
    Contract signings for homes plunge, yet inventory stays low
    Contract signings for homes plunge, yet inventory stays low
    Nicole Oge, Richard Jordan, Oren Alexander and Tal Alexander (Getty, Facebook)
    Richard Jordan and Nicole Oge make it Official with Alexanders
    Richard Jordan and Nicole Oge make it Official with Alexanders

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.