As the dynamics of the rental landscape evolve, so too have the methods by which tenants may engage in fraudulent activities. This has created a challenge for landlords seeking trustworthy occupants. From misrepresented financial backgrounds to false references, this article unravels the spectrum of deceit that tenants can employ during the rental process.
This guide has provided landlords with a better understanding of the various ways in which tenants can engage in fraudulent activities during the rental process.
Fraud in the form of identity theft or fake identities has been on the rise in the rental housing arena, and the current digital landscape isn’t helping things a bit. In fact, technology may have escalated housing scams to a point where the industry is having difficulty keeping up.
TransUnion conducted a couple of studies to assess the biggest challenges landlords face when it comes to fraud in the rental housing industry. It was revealed that 97% of property management companies dealt with some form of fraud, with 80% of respondents saying they had to deal with the issue up to 20 times between 2016 and 2018. What is most shocking, however, is that 41% of the respondents discovered the fraud only after tenant move-in.
The Covid-19 pandemic that followed only made things worse. There was a significant 15.2% increase in fraud cases compared to just 10.3% over the same period pre-pandemic.
Fraud seems to be the price the industry has to pay as a result of increased digitization. Data breaches are on the rise—fraudsters are becoming smarter with identity theft, and property management companies finding difficulty keeping ahead of their precocious tactics.
Here are some of the most common types of fraud that landlords and property managers need to be aware of:
Potential renters create a fake identity using a mix of both real and false information. This is presently the fastest-growing form of fraud.
The applicant uses his own identity but provides fake or altered information on the source of income and rental history.
The applicant takes on another person’s identity or information to qualify for a rental property. In most cases, they use someone else’s Social Security number, name, and date of birth.
The first thing to keep in mind is that you are a landlord, not a law enforcement officer. You cannot take it upon yourself to lock out a tenant the moment you discover some form of fraud, whether they used a true or a false identity.
If a landlord suspects that a tenant has provided false or fraudulent information—including a fake identity—they should proceed cautiously and follow legal procedures. The specific steps a landlord should take may vary depending on local laws and regulations, but here are some general guidelines:
Document any information or evidence that leads you to believe the tenant has provided false information. This may include inconsistencies in the application, identification, or rental history.
It’s advisable to consult with an attorney who specializes in landlord-tenant law to understand your rights and responsibilities in your jurisdiction.
You can contact the tenant to discuss your concerns and ask for clarification. Allow them to provide additional information or correct any discrepancies.
If you still have doubts about the tenant’s identity or information, you can attempt to verify their identity through legal means, such as checking government-issued IDs or running background checks through reputable agencies.
If you have strong evidence that the tenant has provided false information or is engaging in fraudulent activities, consult your attorney to determine the appropriate legal steps to take. In many cases, this may involve initiating eviction proceedings based on the grounds of fraud or material misrepresentation.
Ensure that you follow all applicable local, state, and federal laws regarding eviction and tenant rights. Eviction procedures can vary significantly by jurisdiction.
Keep detailed records of all interactions with the tenant, including correspondence, evidence of false information, and any legal actions taken.
Landlords should avoid taking matters into their own hands, such as changing locks or forcibly removing a tenant, as these actions can lead to legal trouble and may be considered unlawful eviction.
If you believe the tenant’s actions involve criminal fraud, you can report the matter to local law enforcement or the appropriate authorities.
RentPost conducts in-depth tenant screenings, verifying rental history, credit reports, and backgrounds to uncover any inconsistencies or false information.
Integration with identity verification services combats synthetic and third-party fraud, ensuring the legitimacy of applicant identities through cross-referencing with official databases.
RentPost integrates with reliable income verification services, enabling property managers to validate income details and thwart first-party fraud attempts.
The document storage system allows granular associations for cross-verification, ensuring submitted documents align with the information provided in rental applications.
RentPost provides a secure online rent collection system, minimizing the risk of fraudulent payment activities and enhancing overall financial transaction security.
Utilizing intelligent filtering technology and universal search capabilities, RentPost™ employs advanced fraud detection technologies to identify patterns and inconsistencies in applicant information.
RentPost’s commitment to fraud prevention is evident in continuous software updates, providing property managers with the latest tools to stay ahead of emerging fraud trends.
Check out RentPost™’s complete features list and see how we simplify the entire rent process from application to move-out.
Changing locks on a tenant with a fake identity would generally be considered illegal and unethical behavior by a landlord. Landlords must follow specific legal procedures and adhere to tenant rights, regardless of a tenant’s identity or background.
Here are a few reasons why this would be problematic:
If a landlord has concerns about a tenant’s identity or believes they are engaging in fraudulent activities, they should consult with legal counsel and follow the proper legal procedures. It’s important to note that landlords must work within the bounds of the law and respect tenants’ rights, even in challenging situations.
Addressing property management fraud is of paramount importance for landlords and property managers to maintain the integrity of their rental operations. Utilizing advanced rental software solutions like RentPost™ play a crucial role in preventing and detecting fraudulent activities.
From robust tenant screening processes to secure documentation management, our tools offer a multifaceted approach to safeguarding against fraud. By embracing technology, property owners can enhance their ability to identify red flags, streamline verification processes, and ensure compliance with legal standards.
In this modern age, integrating innovative software has become not just a convenience but a strategic necessity in fortifying against potential risks, fostering trust, and promoting a secure and transparent rental environment.
