Security, Compliance Essential as Payment Fraud Escalates

Protecting against payment fraud in multifamily is becoming increasingly important. Online payment channels have become the norm, and were especially valuable to apartment residents last year during the pandemic, following a nationwide trend.

Across the U.S., web debit ACH transactions grew 15% over 2019 and accounted for nearly a third of ACH transaction volume. And, through the first two quarters of 2021, ACH payment volume continues to spike with double-digit increases from the same period last year.

Apartment reenters expect more self-service payment options

A growing trend in multifamily payments is the expectation of more self-service payment options for consumers who have access through multiple devices and channels.

Nearly all tenants polled in the 2020 NMHC/Kingsley Apartment Resident Preferences Report preferred to pay rent via automated online payment systems, including debit and credit cards. Nearly 40% favored a debit card; 24% a credit card.

“This changes the expectation among residents and property managers,” said Nancy Crouch Morlini, Senior Vice President, Payments, at RealPage. “Sixty percent of apartment renters would prefer to pay rent by debit or credit card. This is quite the opposite of what we saw just a few years ago.”

However, more online transactions are leading to a surge in fraud. The U.S. Federal Trade commission reports that, in the wake of increased online transactions last year, reports of consumer fraud topped 2.2 million. Consumers claim they lost $3.3 billion to fraud in 2020, up $1.8 billion from 2019.

The need for tighter security and regulatory compliance in multifamily has never been greater.

Investing in multifamily compliance, security

Morlini says multifamily is faced with a few challenges as online payments – and payment fraud – continue to soar. Among them are increasing numbers of payment providers and payment options, as well as managing regulations and laws related to payment collection and processing.

“Regulations and laws related to payments collections and processing are not only complex but they change frequently,” she says. “Ensuring compliance requires ongoing training, vigilance and monitoring.”

Morlini says RealPage is doing its part to protect clients and their residents, as well as provide solutions to enhance business in the marketplace for properties and portfolio operators.

RealPage, which has more than 20 years of payments experience, has heavily invested in ensuring compliance and paying attention to complex and changing federal and state laws governing payments. More than 250,000 property management companies rely on the company’s payments solutions.

RealPage Payments complies with all applicable U.S. banking laws, credit card and payment industry regulations and guidelines, such as payment card industry or PCI compliance. In addition, the system complies with the national automated clearinghouse association (which regulates ACH payments in U.S.), the U.S. Patriot Act, Bank Secrecy Act and state laws, as well as anti-money laundering.

Ongoing training is provided for clients as well.

Safeguarding against renter payment fraud

Just recently, RealPage put several new processes in place to safeguard against payment fraud and identity theft.

The solution provides greater protection through bank account validation, consumer identify verification and transaction risk monitoring, Morlini says.

“RealPage had $460 million in ACH returns last year and a third of that could be prevented with bank account validation,” she said. “We make sure the bank account is open and able to receive ACH transactions before payment is made to hopefully prevent fraudulent payments and unnecessary returns.”

Also, Morlini says RealPage is working to verify the identity of consumers paying online to help prevent costly chargebacks and returns by reducing the ability of scammers to penetrate properties.

A robust Consumer Identity Program is just one of the requirements of RealPage’s money services business.

RealPage also uses the mounds of transactions processed in its payment platform for transaction risk monitoring.

“We look for things like behavioral anomalies, bad actor blacklisting, card fraud detecting, where we can see if a stolen card is being tested or we can detect usage across multiple properties and units with high velocity transaction declines and chargebacks,” says Morlini.

The solution also detects ACH fraud through excessive returns and unusual transaction patterns. Custom scenario monitoring can be created to proactively observe and identify transactions conducted by residents and employees that might be suspicious, high risk or out of the ordinary to help properties prevent further loss.

Morlini says that properties can never be too careful when it comes to protecting apartment resident transactions, especially with fraud risk on the rise.

“RealPage wants to do its part in protecting clients and their residents.”

Learn more about RealPage Payments and reducing risk of fraud associated with payment collection. Visit Realpage Payments.