Navigating the Rise of Fraudulent Applications:

As many property managers have unfortunately experienced firsthand, fraudulent rental applications have become increasingly sophisticated, posing a significant industry challenge across the country. As unscrupulous would-be renters find new ways to falsify information, from employment history to identity verification, property management teams must stay one step ahead to protect their communities from the financial and safety risks present when these renters slip through the cracks. Understanding the types of fraud most common today and implementing both on-site and professional screening measures can significantly reduce these risks.

The Types of Application Fraud Most Common in 2024

As technology advances, so do fraudsters’ tactics. Property managers should be aware of these prevalent types of application fraud in 2024:

• Identity Theft: Identity theft remains one of the most pervasive types of fraud in rental applications. Applicants may use stolen identities to circumvent credit and criminal background checks, or to hide poor rental histories. In many cases, they buy identities off the dark web or use publicly available information to impersonate others. This can lead to serious security and financial risks for the property and other residents.
• Income and Employment Falsification: With numerous online resources available to create fake pay stubs, fraudsters are manipulating income documentation to appear more financially stable. This tactic is often used to meet income requirements, despite having inadequate earnings to afford the rent. Employment verification fraud is also rising, as some applicants provide false employer references or set up fake phone numbers and websites for “employers” that don’t exist.
• Credit Profile Manipulation: Some applicants are using techniques like credit “repair” or “profile rental” services to inflate their credit scores temporarily. By “renting” credit lines or using rapid score-improvement tactics, they create an appearance of stability that may not be genuine.
• Misrepresentation of Rental History: In an attempt to conceal evictions, past-due balances, or frequent moves, applicants might falsify their rental history. This includes listing fake previous landlords or providing contacts who will give glowing, albeit false, references.
• Synthetic Identities: One of the newer forms of fraud involves creating a completely synthetic identity—combining real and fake information to create a persona that passes background checks. This type of fraud is hard to detect since the “person” is technically not real and does not have a history that could trigger red flags.

What Property Managers Can Do to Identify Fraud on the Frontline

While professional screening is essential, on-the-ground vigilance at the property level can go a long way in identifying and preventing fraud. Property managers and leasing teams should be proactive in their application reviews by incorporating some or all of the following:

1. Verifying Employment Thoroughly. Contacting employers directly is vital but take it a step further by verifying business details and contact information independently. Some fraudsters will set up fake phone numbers or websites to appear legitimate. Use reputable online sources, like LinkedIn or official business directories, to cross-reference company details.
2. Scrutinizing Documents. Train leasing teams to recognize falsified documents, including fake pay stubs, W-2s, and bank statements. Familiarize your team with signs of forgery, such as inconsistent fonts, formatting errors, or mismatched information. Tools that authenticate documents can also help property managers detect fraud at the site level.
3. Running a Social Media Check. Reviewing an applicant’s public social media presence can sometimes reveal inconsistencies with the information provided on the application. For example, if an applicant claims they work at a company, but their online profile lists a different employer, it could be a red flag.

The Importance of Professional Screening in the Fight Against Fraud

While vigilant on-site practices are necessary, the complexity and sophistication of modern fraud demand the expertise of a professional screening agency. Today’s property managers face the challenge of rapidly evolving fraudulent tactics, and in-house checks cannot match the resources and tools specialized screening companies bring to the table. Professional screening agencies use state-of-the-art tools and databases to cross-reference applicant information. These tools can detect altered documents, flag risky behaviors, and verify information with higher precision than on-site teams alone can manage. Because professional screening providers offer specialized support, they are also usually able to generate actionable data in a short amount of time, allowing managers to make approval decisions more quickly.

Professional screening providers also go beyond simple credit and criminal background checks, offering multiple layers of verification. These expert providers are also experienced in detecting synthetic identities and credit manipulation schemes. With sophisticated algorithms, they can identify anomalies in credit profiles that leasing teams may not recognize.

Moving Forward: Creating a Safer Community

Fraudulent applications pose a real threat to apartment communities, potentially leading to costly evictions, property damage, and safety concerns for legitimate residents. By understanding the most common types of fraud and implementing robust on-site verification practices, property managers can reduce the risk of accepting fraudulent residents. However, the added layer of a professional screening company is invaluable and a critical component in navigating the world of applicant screening today.