The facts
In a sophisticated deepfake fraud scheme, a property in Nevada was falsely listed for sale by an impersonator using advanced deepfake technology to create a convincing video of the true owner. The impersonator, posing as the legitimate owner, communicated directly with Sarah, a NV real estate agent, providing a seemingly authentic video introduction and answering questions about the property. Sarah engaged in discussions about the sale, including pricing strategies and potential buyer interest. She even shared sensitive information about prospective buyers, including their financial qualifications and offers. After the call, Sarah proceeded to market the property more aggressively, confident in the legitimacy of the transaction. Believing she was working with the actual owner; Sarah facilitated the sale without adequate identity verification. Unbeknownst to her, the true owner, Joe Bloggs had never intended to sell the property and was completely unaware of the fraudulent activities.
The result
After completing the sale, Joe Bloggs discovered a deception when he went to town hall to pay his taxes. Upon this discovery, he reported the incident to the authorities. Joe alleged that Sarah, the real estate agent, was negligent in failing to verify the seller's identity before facilitating the sale, a responsibility inherent to her role as a licensed professional. This oversight not only breached her fiduciary duty to prioritize the interests of her clients and the true property owner but also resulted in a misrepresentation of the property's status, misleading potential buyers into believing they were part of a legitimate transaction.
Furthermore, by disclosing sensitive information about prospective buyers without confirming the seller's authenticity, Sarah violated their privacy and jeopardized their personal and financial data. The fraudulent activities stemming from this situation caused Joe considerable emotional distress, which he argued was worsened by Sarah's negligence, leaving him to deal with the repercussions of the impersonation and the risk of losing his property.
Additionally, the fraudulent sale led to a series of legal complications, leaving the buyer without recourse as the impersonator was never identified. Sarah's reputation suffered severely, and her career was jeopardized due to a license suspension, resulting in a loss of trust in her professional capabilities. The total cost to resolve this situation amounted to $120,000, which was covered by Sarah’s E&O policy, addressing privacy violations, identity theft, breach of duty, and defense costs. Sarah’s E&O policy included a bodily injury endorsement, which specifically addressed damages for bodily injury, further highlighting the importance of comprehensive E&O cover for real estate professionals.
Risk factors
Risk factor #1
The vulnerability in identity verification during real estate transactions can lead to significant fraud. To mitigate this risk, real estate agents should implement multi-factor authentication, requiring multiple forms of verification from sellers. Additionally, they can utilize third-party services specializing in identity verification, provide comprehensive identity checks to ensure the legitimacy of sellers.
To further enhance verification processes, agents can inject randomness into real-time interactions by including unexpected requests for verification. For example, during a video call, a user might be asked to perform an unexpected action, such as holding up a specific document or answering a random question that requires immediate recall, which a deepfake would struggle to replicate.
Moreover, trust platform safeguards can be implemented to identify potential deepfakes. This includes using email verification services to verify the authenticity of email addresses, and phone number validation services to check if a phone number is valid and associated with the claimed identity. Additionally, geolocation services can assess the login location and device for suspicious activity, further strengthening the identity verification process.
Risk factor #2
The rise of AI-generated deepfake technology poses a new threat in real estate transactions. To mitigate this risk, agents should engage in regular training on the latest fraud techniques, including recognizing deepfakes. This training can help agents develop a keen eye for identifying suspicious content.
Furthermore, partnering with cybersecurity firms that offer deepfake detection services, can provide agents with advanced tools to identify and flag fraudulent content before transactions proceed. These services can analyze video and audio content for signs of manipulation, helping to ensure that agents are not deceived by sophisticated deepfake technology.
Lastly, agents can spread the word with colleagues and clients that such scenarios exist, thereby reducing the risk of falling victim to deepfake fraud.
Risk factor #3
Sharing sensitive information about potential buyers without proper verification can lead to data breaches and privacy violations. Real estate professionals must ensure that they protect client information and only share it with verified parties. To mitigate this risk agents must be particularly cautious about sharing client information, including personal identification numbers, financial details, social security numbers, and any proprietary information related to the transaction. This information should never be shared with unverified parties.
Risk factor #4
Real estate agencies must comply with real estate commission regulations regarding the handling of transactions and client information. Failure to do so can result in legal repercussions and damage to the agency's reputation.
*This claim scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
