The True Impacts of Rental Application Fraud & How Technology Can Help

The uptick in renter fraud is an extremely concerning trend in multifamily today. In our digital world, sophisticated techniques exploit vulnerabilities in property management companies and threaten the integrity of a community with false documentation, impersonation of legitimate residents and manipulation of financial transactions. In fact, the following statistic from the industry’s largest fraud study should sound alarm bells:

73% of participants reported that 59% of renter fraud is detected after move-in.
– 2024 National Multifamily Fraud Research Study

This means that fraud is not being caught early in the rental application process. The application records the personal details of prospects, like identity and income, to see if they qualify for an apartment lease and the associated responsibilities.

Unfortunately, fraud is difficult to detect because it works quietly behind the scenes as fraudsters engage in pre-move-in tactics like stolen or synthetic identity, fake renter history, fabricated employment documentation and falsified income verification. In many ways, these hidden threats can jeopardize the experience of residents and onsite leasing teams and the financial stability of properties.

The impacts of rental scams in multifamily

When deceptive people move into your property because they outsmarted your prequalification leasing process, several things can happen:

Dampened resident experiences

Fraud can negatively affect the overall living experience in a community. It can cause distrust and suspicion among residents and eliminate the sense of cohesion and camaraderie essential for thriving resident experiences. As a result, you end up focusing resources on fraud-related issues, like legal fees and damage control, instead of on the amenities, services and infrastructure that keep residents happy.

Compromised reputation

99.5% of participants reported that rental fraud has impacted their company in the last 12 months, with 51% experiencing reputational harm.
– 2024 National Multifamily Fraud Research Study

The rise in post-move-in fraudsters can divert attention from existing residents, including those up for lease renewal. Residents can become dissatisfied by a lack of dedication and distrustful if issues like rowdiness or criminal activities are not addressed and prevented. As a result, these feelings can be posted in online reviews that reflect poorly on your property and damage your reputation.

Staff workflow inefficiencies

65% of participants reported using manual methods to aggregate data from different solutions to screen and validate rental applications.
– 2024 National Multifamily Fraud Research Study

Manual methods of identifying rental application fraud can burden staff with time-consuming tasks and divert resources from essential responsibilities. These processes are also error-prone and require ongoing training that can result in staff frustration and burnout.

Revenue loss

People who have deceived their way into leasing an apartment can default on rent, abandon the unit, require eviction and/or damage or steal property on their way out – all affecting your bottom line.

How can you approach fraud detection differently if you fall prey to rental scammers? One solution is to enlist advanced verification technology earlier in the process.

Amp up your prequalification process

Before prospects sign rental applications and move in, prequalify them by validating their income and identity with AI-powered verification technology:

Income verification

An innovative income verification solution minimizes fraud risks by leveraging highly curated machine learning models to evaluate transactional data directly from bank reports, payroll providers and other income sources. It’s also robust and easy to use, all with an eye on reducing manual labor by leasing staff.

Identify verification

A cutting-edge ID verification solution uses AI to evaluate attributes and patterns for suspicious activities. It evokes machine learning models trained on thousands of curated data sources to prevent stolen and synthetic identities. It also enables staff to make better, faster decisions.

Don’t let fraudsters slip through the cracks and into your multifamily community because of an ineffective prequalification process.

How to stop rental application fraud before it starts

Step it up to outperform the competition by keeping happy residents, safeguarding your reputation, optimizing workflows and reducing financial costs. With the right verification technology for fraud prevention, you can:

• Centralize decision making
• Track and measure fraud retroactively
• Pinpoint trends and future fraud risks
• Understand the true impact of fraud

Protect your property and fill vacancies with qualified prospects with the help of AI-enabled income and identity verification technology deployed at the prequalification stage of the apartment application process.

To learn more, visit Prequalification Solutions.