Fraud in the Renting Industry
It remains one of the top concerns for property managers because it is so common within the industry. Recognizing fraud in renting before it costs you thousands has become a major concern for property managers. So, what kind of fraud exists when it comes to renting?
Types of Fraud
- Rental Application Fraud occurs whenever an applicant puts false information on their application. Ex: ID photo, claimed income.
- Synthetic Fraud is one of the fastest-growing types of fraud. This is when both accurate and false information creates a false identity. Ex: fake Social Security number + real address.
- First-Party Fraud happens when a person submits documents that are not accurately depicting themselves, either by being entirely fake or altered. Ex: Old addresses, edited bank statements.
- Third-Party Fraud is when a potential renter uses an entirely separate identity or information to apply to a property. Ex: Using another SSN, name, and address.
What to do
Now that you can recognize fraud in renting, how do you prevent it? Although fraud is common, it is easier to prevent it in the first place than to get rid of someone who is defrauding. In a study done by TransUnion, 1,189 applications were flagged for potential fraud out of 40,000 online applications. Once they were flagged, they were asked for additional proof of identification. This alone led 220 of these applicants to give up pursuing the listing. Click here to learn more about fraud in the multi-family industry.
Some tips for identifying fraud include:
- Use a third-party screening agency to determine fraud before a lease is signed
- Don’t rely on the applicant’s word, verify their references
- Don’t rely on automation, use a real person to call a supervisor to verify.
Now where to start? Able Screening knows how to help you get your space rented with security. Call 415-353-0744 to talk to a real person. Email us for additional insight & questions:
For additional tips on what to look for when performing a background check, visit our blog post on What Landlords Should Look For In A Background Check.