How real estate and lease administration teams can safeguard payments and protect sensitive financial data
Electronic bank fraud continues to evolve, and lease related transactions have become a growing target. Phishing attempts, email account takeovers, and rent payment diversion schemes can create significant financial and operational risk for both tenants and landlords. The good news is that strong controls and consistent processes can prevent most incidents before they occur.
Below are practical, real world steps that organizations can take to strengthen their defenses and promote a culture of verification and security.
Recognize Common Fraud Scenarios and Red Flags
These schemes typically include subtle warning signs such as unfamiliar sender addresses, unexpected urgency, or slight changes to payment instructions. One of the biggest warning signs can be communications from landlords that use email addresses or phone numbers that differ from the contact details you already have on record, or an unscheduled communication asking for payment or to set up a new process. Be sure to double check email addresses if you suspect anything – the difference may be as small as an extra period or letter!
Teams can stay ahead of these schemes by establishing and following a verification process and training staff to recognize red flags early. Here are a few recommendations to keep in mind gathered from experienced NRTA members with decades of learning how to avoid scams.
Verify Wire or ACH Instructions Before Funds Move
Before releasing or updating payment information, organizations should rely on structured, non negotiable verification steps. Recommended practices include:
- Requiring the requestor to provide unique identifiers such as a Tax ID or vendor number.
- Confirming details verbally using a trusted phone number already on file, not one supplied in the email.
- Using a penny test before initiating a full transfer.
These steps create checkpoints that help prevent accidental approval of fraudulent instructions.
Protect Sensitive Banking Information Internally
Sensitive banking data should be stored in encrypted, access controlled systems with multi-factor authentication. Restrict access to staff who require it, review permissions regularly, and follow IT Security guidance for all storage and file sharing practices.
Authenticate Third Parties Before Processing Payments
Any changes to payment details should be confirmed directly with your landlord using established contact methods. Never rely on phone numbers or email addresses provided in a message that may be fraudulent.
Strengthen Internal Communication Channels
Access to shared drives and lease management platforms should be limited to authorized personnel. Conduct regular reviews to ensure security, stay aligned with your IT Security team, and never click a link unless you are certain of the sender’s identity.
Use Dual Approval and Separation of Duties
Establishing separation of duties and adding multiple checkpoints throughout the process is a key control for preventing fraudulent payments. When more than one individual reviews changes, the likelihood of detecting inappropriate activity increases significantly.
Maintain Accounting Controls That Catch Issues Early
Organizations often have strong internal controls, yet landlords may still be vulnerable to unauthorized withdrawals or payment diversion. Encourage landlords to confirm receipt of their electronic payments each month and report any missed deposits immediately.
Strengthen Lease Agreements With Fraud Prevention Language
Contractual safeguards can reduce ambiguity and clarify responsibility. Recommended provisions include:
- Requirements to verify payment instructions
- Defined liability for fraud
- Secure communication expectations
- Insurance coverage for losses.
- Clear procedures for reporting and resolving suspected fraud
Respond Quickly When Fraud Occurs
If a breach occurs, take immediate action to limit losses. Communicate with your landlord to determine the source of the breach. If the fraudulent activity originated from their system, they should work with their bank to mitigate financial exposure. They can also contact their insurance provider and local law enforcement to create an official record of the incident.
Building a More Secure Leasing Environment
Electronic fraud prevention relies on clear processes, trained teams, and consistent verification. By combining strong internal controls with secure communication practices, organizations can significantly reduce risk and protect the integrity of lease related transactions.
If you would like help strengthening your fraud prevention workflows or educating your team on best practices, NRTA is here as a resource! Contact our team and we’ll connect you with trusted industry experts to help you solve your problem or answer your question.