It’s believed that one of the first instances of fraud occurred in 300 BC when a Greek merchant named Hegestratos committed a form of insurance fraud. Unsurprisingly, fraud looks much different 2,323 years later. As technology progresses, property management fraud techniques are more and more sophisticated.
Have you felt the impact?
The COVID-19 pandemic shifted many leasing steps to a virtual process. Has this new environment opened the door to more fraud opportunities? TransUnion® conducted a survey of 82 multifamily executives in September 2020, six months into the pandemic. At that time, they found that the frequency of fraud incidents increased for 48% of respondents.
What types of property management fraud exist today?
- Identity Theft – The applicant poses as someone else
- Identification manipulation – Slight changes made to identification details, such as an adjusted date of birth, which undermines vetting
- Synthetic identification – Creating a false identity through a mix of real and fabricated information
- CPN – Submission of credit privacy numbers
- Income fraud – The use of fake paystubs, tax statements, employee letters, etc.
- Rental verification – Providing self-supplied phone numbers for references due to bad rental history
How do property managers combat these types of fraud?
It is crucial that property managers take steps to protect themselves and help their employees recognize fraud. Knowing what steps to take to combat deception can be confusing, so where do you start?
Do you have adequate digital security in place?
A separate TransUnion® study, released in March 2023, shows an astonishing 122% increase in digital fraud attempts originating in the United States from 2019 to 2022. The introduction of virtual leasing, online applications, digital payments, and other technologies have been key advancements for our industry and processes. However, these innovations have also led to an increase in risk, and as a result, property management fraud.
What are the next steps for you?
Here are a few suggested steps to take:
- Streamline your screening process using fraud detection technology. Many resident screening companies make fraud detection technology available during screening. This can be a quick process and pulled automatically with a resident screening report.
- Optimize your verification methods. Are you obtaining proof of identification throughout the leasing process? Reviewing proof of identification at several stages throughout the leasing process is becoming more important. But when should you verify proof of identity? Verifying identity at the time of tour, during the application process, and when providing keys and signing a lease may help mitigate fraud.
- Automate income and rental verifications. Resident screening companies often verify income, employment, and rent. This service can be used to verify information on applicants as well. Some verification services now include bank statement data that allows you to confirm rental payments and income at the same time.
- Trust your partners and your team. A dependable partner, and open communication with your staff, can deliver peace of mind during the screening process. Work with a reliable resident screening partner and encourage open communication with your team so they’re comfortable bringing questionable applications to your attention.
- Have an individualized assessment process in place to address denial disputes filed by applicants. An individualized assessment is a review of an applicant’s criminal record. Relevant evidence might include the facts or circumstances surrounding criminal conduct, the age of the individual at the time of the conduct, evidence that the person has maintained good tenant history before and/or after the conviction or conduct, and evidence of rehabilitation efforts. Taking time to perform an individualized assessment will allow you to be more thorough and make fully informed decisions. With the release of the Renters Bill of Rights in January 2023, property managers need to stay consistent with fair housing policies and landlord/tenant laws impacting their properties. For more information on the Renters Bill of Rights, check out our article on the proposal.
Are you taking steps to prepare for an increase in property management fraud? Is your current resident screening provider discussing these concerns with you? Proactively protecting your business from fraud is more important than ever.
As Rent Manager’s preferred screening partner, AmRent endeavors to keep their customers informed and offer products to combat fraud.
Interested in learning more? Contact AmRent at firstname.lastname@example.org or visit their profile page to request more information.
*This blog does not constitute legal advice and each customer should refer to their own counsel.
**If your screening service is not delivered by AmRent via its integration with Rent Manager, check with your current provider to learn how they are managing fraud detection.