Organized rings of fraudsters and other bad actors are using a range of sophisticated deceptive practices to obtain apartment leasing, according to a new survey of more than 400 property management professionals by RealPage.
More than 50% reported seeing diverse types of fake identity, income fraud or approval errors and just 17% currently have a portfolio-wide fraud prevention initiative in place and yet 97% of respondents report that reducing renter fraud is a top priority.
Just 22% have formal metrics for tracking rental fraud and its business impact and 73% say more than half of rental fraud is detected after residents move in.
These instances are reducing income and increasing costs by 10% to 20%, according to 77% of the respondents, who were surveyed in early January.
Another factor driving the trend is the wide availability of “how-to” information on social media that show how to exploit gaps in protection.
“Rental fraud has become increasingly sophisticated,” said Josh Albrechtsen, RealPage SVP and GM, Front Office. “With fraud coming from multiple directions, effective solutions must offer multifaceted verification, across data, device, document, and biometrics, leveraging AI and machine learning.”
Training employees to identify rental fraud is not getting it done, according to RealPage. Almost half of respondents (43%) said their site staff are not financially motivated to prevent it, according to the company’s release on the survey.
Common actions taken with fraudulent applications include fake or manipulated identities (58%); misrepresenting income (57%); and identity theft (53%).
“Research supports what the industry has long known – rental application fraud continues to be a sizable concern across all classes and sectors of the rental housing industry,” Bob Pinnegar, President & CEO, National Apartment Association tells GlobeSt.com.
“NAA is committed to working with industry stakeholders to address this risk, in large part by ensuring that housing providers retain the ability to effectively screen all prospective residents. Addressing the dangers associated with rental fraud is critical to the long-term viability of rental communities and managing risk for housing providers, their communities, residents and staff.”
National Multifamily Housing Council conducted a similar survey a few months ago.
“There has been anecdotal evidence of the rise in fraudulent activity over recent years, but now we have clear evidence of the staggering impact of these crimes on the rental housing market,” NMHC President Sharon Wilson Géno said in a release.
“While most renters are honest, those who are not are causing the cost of rental housing to increase for everyone. Additional delays in many jurisdictions in the lease enforcement process, even when there is clear fraud, incentivizes bad actors and means that this illegal behavior costs responsible renters even more. We call on lawmakers and courts to take action that will address this problem.”
Source: “Apartment Rental Fraud Becoming Increasingly Sophisticated“
