Is your Landlord’s tenant information open to a data breach?
Fitch Ratings-recently reported that while the potential long-term effects of Essex Property Trust’s data breach are not yet known, the incident may serve as a harbinger of future problems for multifamily Real Estate Investment Trusts (REITs).
A REIT is a type of real estate company modeled after mutual funds. REITs were created by Congress in 1960 to give all Americans the opportunity to invest in income-producing real estate in a manner similar to how many Americans invest in stocks and bonds through mutual funds. Income-producing real estate refers to land and the improvements on it, such as apartments, offices or hotels.
According to Fitch’s press release, Essex filed an 8-K on September 29th indicating that its computer networks containing personal and proprietary information had been compromised by a cyber-intrusion and that the company was determining whether any employee or tenant data is at risk.
Following major data breaches at Target, Home Depot and JP Morgan Chase, network security risks are haunting corporations large and small. For REIT’s, the threat is especially real due to the types of data these companies collect and store on their networks. Rental applications often require prospective tenants to list various forms of personal identifying information, including addresses, bank account numbers, proof of income and tax returns. Furthermore, REIT system portals that are used to collect online rent payments from tenants contain private information like credit card and social security numbers – a data goldmine for cybercriminals.
While the impact of a REIT data breach may not reach the same magnitude as those occurring at major retailers, a hack into these trusts still exposes REIT owners to various liability risks. With an increasing number of today’s tenant population (especially the 18-34 sector) using online programs for realty purchases and investments, the real estate industry faces the challenge of managing and protecting their customers’ data. Talk to your WGA representative today to learn more about REIT business insurance policies and keeping all data stored safe and secure.
About the Author
David Bardelli is a Senior Vice President in the Property & Casualty Group and the Casualty Practice Leader for WGA. David has extensive knowledge with casualty risks, including technology healthcare, business services and miscellaneous manufacturing groups of all sizes.