Online rental applications have become increasingly more popular due to the coronavirus pandemic and the need for contactless services, but it has led to an increase in rental fraud too.
Now, one credit agency is warning landlords and property managers that they may face a higher risk of rental fraud.
TransUnion’s survey of 82 multifamily executives found that the frequency of rental fraud has increased by almost 50% since the pandemic began. The majority of execs say they were able to identify the fraud before the tenant moved in, but 41% said they were unable to identify any red flags prior to the renter taking occupancy.
Most rental fraud involves people misrepresenting their identity by, for example, using someone else’s driving license or ID card, or by assuming an entirely fake identity.
The report adds that the percentage of fraud triggers that respondents detected rose by almost 30% from March to August. Such triggers include applicant statuses with a failed authentication check, or those that are flagged as such for other reasons. Those fraud triggers stood at just 10.3% prior to the pandemic, but by August had risen to 15.2%.
Some property managers have responded to the apparent increase in fraud by adding more identity verification requirements to flag possible fraudulent applications.
“Fraud continues to be an increasingly concerning issue in the multifamily industry for the last several years, and the COVID-19 pandemic-driven shift to virtual leasing has pushed this concern to the forefront for property managers,” said Maitri Johnson, vice president of TransUnion tenant and employment business. “It is imperative that management companies take the necessary precautions and protect their business against the economic impacts brought on by the current environment, as well as the increased propensity for fraud that may not be easily evident today.”