Dive Brief:

• Eighty-five percent of apartment property managers feel consumers are becoming more comfortable committing application fraud, according to the 2022 State of Apartment Tenant Screening Survey from Snappt, which provides fraud detection services.
• Snappt estimates that 11 million fraudulent rental applications were submitted last year in the U.S. The firm also found that one in eight financial documents had been fraudulently altered out of the more than 1 million it scanned. “Application fraud is more prevalent than you would think, especially in a world of online applications," Daniel Berlind, CEO of Snappt, said in a press release.
• Between 2019 and 2021, reports of fraud, identity theft and other deceptions spiked 67% in the U.S., according to the Federal Trade Commission. In a 2020 analysis, LexisNexis found more than 30,000 fraud rings involved in forgery, filing false claims, identity theft, identity manipulation and fake bank checks.

Dive Insight:

As the screening survey pointed out, it’s not hard for a person to doctor a pay stub or bank statement or buy fake ones online. When these renters move into apartments and can’t pay, it can eventually lead to eviction, which costs an average of $7,500 each, according to the firm.

“There is a significant risk around [application fraud],” Nicole Upano, assistant vice president of housing policy and regulatory affairs for the National Apartment Association, told Multifamily Dive. 

But the problems can go much deeper than simply falsifying pay stubs to present an income that would qualify for an apartment. People are also using stolen identities to access apartments for more nefarious reasons, according to Upano. 

“It could just be someone who wouldn't normally qualify, and they’ve gotten a false identity just to be able to rent the apartment,” Upano said. “But it could extend to something more egregious, like a full-on criminal enterprise that is either happening in the apartment or they're using it for financial fraud.”

The activities fraudsters could commit are enough to keep property managers up at night.

“It extends to potentially criminal activity on the property, whether that's drug-related or something else,” Upano said. “Unfortunately, sex trafficking is sometimes associated with this type of fraud.”

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