The statistics certainly tell a concerning story about fraudulent lease applications in the rental industry. In a survey of property management professionals by Entrata, a provider of property management software and other technologies to the rental-housing industry, 55% of respondents said their apartment communities experience fraudulent lease application attempts every few months, with 15% saying they endure multiple attempts every month. Furthermore, 33% of respondents said they are “very concerned” about fraud, and 65% stated they are not confident in their current fraud prevention efforts. Tactics and impacts Lease application fraud tends to fall into two categories: deception intended to improve the tenant’s perceived ability to pay rent and deception intended to hide evidence of past mismanagement of their finances.
Attempts to improve the perceived ability to repay generally take the form of falsified employment records, pay stubs, bank statements and other documents that create an inflated picture of the applicant’s cashflow and the assets available to pay rent — even if they suffer a financial setback. It’s worth noting that the same technology advances that drive the digital revolution also make it much easier to commit this type of fraud. Even the most basic home computer can provide ample functionality to capture and re-use digital images, or to scan and edit documents. As software continues to emphasize ease-of-use, more and more tenants will be able to act on the temptation to engage in this type of behavior. Hiding evidence of past financial mismanagement is a form of identity fraud that’s common in any industry that relies on a view of past behavior to predict future events. Entities like credit reporting agencies receive account information from lenders and consumer-entities businesses. The effective use of this data relies on the ability to retrieve a complete and accurate history each time the individual provides their identity to as part of a tenant, lending or other application. People with a patchy or unattractive financial history are inclined to manipulate their identities in the hope that the altered information won’t be matched to their negative history. Credit reporting agencies and other consumer data aggregators are extremely good at returning complete and accurate information even when identities are manipulated. It’s central to their business and there are extraordinary business and regulatory pressures on them to do this well. However, finding all of the relevant data sources, investigating documents provided in many different formats, putting it all together and offering a clear scoring decision is not something that can be easily accomplished. This is where Approveshield has found its niche. Through innovation and hard work this has become one company that property owners from around the country have come to rely on for discovering even the most thought through fraud schemes. Approveshield analysts spend countless hours researching suspicious applications and training on proven fraud cases, which directly benefits the clients as they enjoy some of the lowestlease defaults in the industry.
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A number of tenant scams happen regularly, victimizing landlords who do not have effective procedures in place for screening renters, collecting rents, and writing the right contract. These scams can pose a great risk to the business.
1. False Prior Rental Verifications The most common tenant scam we find is false prior rental verifications. Someone will answer the phone as the landlord of a property they either did not live in or was not really the actual landlord of the property they live in. We at Approveshield will verify rental history using proven methods that minimize chance of fraud 2. Tenants Doing Things to Reset the Eviction Process One of the most common tenant scams is when a tenant pays partial rent, perhaps $50 or $100, when they owe significantly more and are in the eviction process. By accepting their payment you are resetting the clock on the eviction and you’re being forced to start the entire eviction from scratch. Another scam is when former tenants who have been evicted will, on the day of the eviction, ask for a few more hours or an extra day to move their things. By allowing them to stay the extra few hours, I’ve had people basically squat in the dwelling, resetting the eviction process again. Once the officer leaves, it’s difficult to force them out without starting from scratch again. 3. Providing a Fake Credit Report One common scam among professional tenants is to convince the landlord to accept a credit report provided by the tenant (not run independently by the landlord), and to hand over the keys when a lease is signed and a paper check delivered. As soon as the lease agreement is signed and the keys handed over, the tenant now has legal possession of the property. The only way to get them out is to go through the legal eviction process, which takes months. In many jurisdictions, tenants can prolong the eviction process for six to 12 months.Approveshield sources the credit report directly from the credit reporting agency, allowing for an early detection of fraud in the application process. 4. Using Fraudulent Documents during the Application Process One of the most common types of tenant scams is the creation of fraudulent documents that form part of the rental application. Landlords need to know that it is important to verify the details that tenants provide in their employment letter and reference letters. There are professional scammers who employ this method in order to get into a property, and shortly thereafter their checks begin to bounce. Being duped into this scam can cost landlords a few months’ rent while they apply to a tribunal to have the tenancy terminated and the tenant evicted. Approveshield combines the power of Machine Learning with the experienced Research Analysts to create a defense mechanism against the ever increasing number of applications that are backed with fraudulent documents |