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Snappt's Blog

This blog focuses on topics such as identifying fraud, reducing evictions and lowering bad debt in the multifamily housing industry.

STEER CLEAR OF THESE 13 RESIDENT SCAMS

1.    Inability to Pay Their Rent

While most renters are not out to scam you, there are some who will move in with no intention of paying rent. They are counting on the fact that you will not double check, and their goal is to live rent free as long as possible with no eviction.

To prevent this type of fraud from happening, you need to develop a thorough screening process:

·       Every prospective resident must complete an application.

·       Run a background and/or criminal check.

·       Request a credit history.

·       Contact employment references to ensure that the information on the application is correct.

·       Contact their previous landlords.

·       Request financial documents, such as pay stubs, to confirm  employment. 

2.    Money Wiring Scams

Property managers can lose and immense amount of money each year dealing with wire transfers. Once the rental application has been accepted, victims of this scam are sent a fake check that is for more than the initial rent and fees. The renter then requests that the extra funds be wired back to them. As it takes time for the fraudulent check to bounce, the unknowing property manager is now out the funds that were wired back to the potential tenant and any funds used from the check. If you do accept wire transfers, remember that funds from a check deposited into an account should not be used until the check clears.

3.    Falsifying Pay Stubs

Pay stubs provide valuable information about prospective tenants and how much money they have, but sadly, fake pay stubs are very common. Many sites online can help you create phony pay stubs in minutes so that you can apply for rentals without indicating your actual employment status or income.

To avoid being tricked, check all the basic information on the pay stub. Look for any discrepancies in the numbers, formatting, quality, and always make sure to ask for employment references.

4.    Illegal Sublets to Third Parties

Subletting an apartment is an excellent alternative for people looking for a situation that is a little more flexible. However, an illegal or unapproved sublet is more common than you might think. Renters find it easy to sublet their apartment, require six months’ rent up front, and then take off. When you stop receiving your rent payments, you find that the other tenant without a lease agreement is living there.

5.    Writing a Check Larger Than the Move-In Amount

Similar to a money wiring scam, a new tenant will write a check for more than their rent and sometimes send twice as much by accident and then ask you to return the over payment. Later, you will find out that the check is counterfeit, and you are out the rent payment and the extra funds you returned.

If this happens, ask the tenant to rewrite the check for the correct amount, or tell them you will apply the additional funds to next month’s rent.

6.    Resetting the Eviction Process

A common tenant scam can happen during the eviction process. If you have already filed for an eviction and then accept a partial or late payment, you may be forced to start the entire eviction process from the beginning. Also, if a tenant who is being evicted asks to stay in the apartment for a few more hours or an extra day and you allow it, this can also reset the eviction process, and you will be forced to start the process over. In addition, make sure you understand the eviction laws for your state.

7.    The Tenant–Landlord

According to the 2019 Identity Fraud Study from Javelin Strategy and Research, there were 14.4 million victims of identity fraud in 2018. Identity fraud is another scam you need to be aware of as a property manager. Using a false identity, a potential candidate can rent an apartment from you, but when you visit the property, someone other than the original resident answers. You soon find out that the original tenant has rented the property to an unsuspecting tenant and took the first six months’ rent in advance. Make sure you are screening tenants carefully, but if you are only doing a background check, you could be checking on the wrong person. Make sure you get proof of identification to prevent someone from using a stolen identity.

 

8.    Providing a Fake Credit Report

Some prospective tenants will offer you a copy of their credit report to save you the time. However, a potential resident can simply go on the Internet and use a template to make their own credit report, and these sites are very easy to find. By signing a lease agreement and handing over the keys without doing your own research, you open yourself up to a number of problems.

9.    Stealing Your Listing

The Internet has made it easier than ever for someone to steal your information, and rental scams are becoming more common. Someone could easily copy your property listing, download your photos, and post them to another site at a discounted dollar amount. The scammer then proceeds to rent the property to another person, asks for the rent up-front, and tells the renter to pick up the keys at the property.

Always protect your listing by adding a watermark to your photos with your website or company name to prevent others from using them. If you find a fraudulent listing, make sure you report it to the website such as The Federal Trade Commission.

10.        Using Fraudulent Documents

Providing fraudulent documents is one of the most common scams. A number of websites that can teach anyone to create counterfeit documents have surfaced.

Property managers need to be extremely vigilant in verifying and, in some cases, re-verifying the documents submitted by applicants. You can eliminate much frustration and additional costs simply by making a few calls to verify employment details and previous rental activity with former landlords and by confirming whether the name of the person giving the reference matches the property ownership or business registration.

11.        Lying about Co-Tenants

Having a co-tenant or roommate is a great way for potential renters to reduce their financial obligations, but some tenants may conceal who they have living with them if it is someone with criminal or credit problems that could hurt their chances of renting a property.

Make sure your tenant includes the correct number of co-tenants in the lease agreement and that they understand any breach can be grounds for immediately terminating the lease.

12.        Phony Employment

Similar to providing fake references, potential tenants may also provide fraudulent information for their employer and hire a professional or a friend to act as a human resource (HR) contact or reference to verify their employment. You may want to independently contact the company that the applicant provided using the company website listing.

13.        Property Damage

A tenant may deliberately damage something in the rental property and then report to the Licensing and Inspections Department that the property manager has not made the repairs. Once the Licensing and Inspections Department issues a violation or citation, the tenant can then refuse to pay rent.

Property managers need to call previous landlords in order to see if this has been a problem in the past. Conducting regular inspections of the property and documenting any damage or issues are also important.

In Conclusion

In light of all these potential scams, tenant scanning must a priority. While going through each step may take additional time, energy, and effort, it will be worth it in the end. Do not assume the documents are correct, and do not take shortcuts.

 

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enjoyed your article except it needs proofreading!

  Rose Williams

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