Sophisticated, organized rental application fraud reveals a gap in portfolio-wide protection of value, safety and reputation
RICHARDSON, Texas – March 25, 2024 – RealPage®, a leading global provider of software and data analytics to the real estate industry, today released the findings from its proprietary fraud study, the largest national fraud survey of the multifamily industry conducted to date. With more than 400 property management professionals responding across five major U.S. markets, the study uncovers the drivers behind recent spikes in the frequency and complexity of rental application fraud, the industry’s self-reported success or failure in fraud prevention and technology adoption, and the business impact of fraud.
Key multifamily concerns addressed in the new survey include:
- What is driving the increase in apartment rental fraud - Increasingly organized rings of fraudsters and the wide availability of “how-to” information on social media are exploiting gaps in protection
- When fraud is being detected - The lack of sufficient detection prevents early recognition of diverse types of fraudulent action during the rental application process
- How well fraud impact is understood - limited operator visibility into the full business impact of rental application fraud at the local level contributes to a broader, deeper effect on end-to-end property and portfolio results
"The most alarming surprise in the nationwide findings from 402 multifamily professionals isn’t that 75% saw more rental fraud in the past year," said Josh Albrechtsen, RealPage SVP and GM, Front Office. “The real eye-opener is how much more organized, diverse and difficult to discover the fraud is — resulting in extended damage to revenue, reputation and residents.”
The Challenges
Even as 97% of respondents report that reducing renter fraud is a top priority for their companies, the survey exposes key vulnerabilities in areas of detection, prevention and financial impact:
- Only 17% of companies have a portfolio-wide fraud prevention initiative
- Fewer than 1 in 4 (22%) have formal metrics for tracking rental fraud and its business impact
- 73% say more than half of rental fraud is detected after residents move in
- 77% believe rental fraud currently reduces income/increases costs by 10-20%
The Study
In partnership with Dimensional Research, RealPage commissioned a detailed fraud survey online with multifamily property management professionals in five of the largest multifamily markets across the US: Atlanta, Houston, Los Angeles, Miami and Seattle. Designed to deliver current data on trends in application fraud for rental properties, the RealPage survey conducted from January 2-9, 2024, was completed by 402 rental application decision-makers in property management roles responsible for 10K or more units.
“Rental fraud has become increasingly sophisticated, and our customers need new and better tools to address the threat across their portfolios,” said Josh Albrechtsen, RealPage SVP and GM, Front Office.
“To help leasing staff make the best-informed decisions and enable a corporate office to set and enforce policy, visibility and transparency of assessment details is essential. With fraud coming from multiple directions, effective solutions must offer multifaceted verification, across data, device, document and biometrics, leveraging AI and machine learning.”
The Trends & Insights
While most survey respondents report that they train employees to identify rental fraud, almost half of respondents (43%) said their site staff are not financially motivated to prevent it. In addition, the complex mix and broad impact of the fraud present widespread operational challenges that can vary by location, property size and level of centralization of the organization.
The study indicates room for innovation and process improvement in multifamily organizations’ attempt to reduce fraud: besides using inconsistent approaches to validate information across portfolios, almost two-thirds (65%) of multifamily respondents still rely on manual methods to aggregate data across solutions.
Bad actors are using a range of sophisticated deceptive practices
More than 50% reported seeing diverse types of fake identity, income fraud or approval errors:
- Fake or manipulated identities (58%)
- Misrepresenting income (57%)
- Identity theft (53%)
- Site staff pushing through unqualified candidates (51%)
Rental fraud is bad for business
- 86% believe that rental fraud currently reduces income and/or increases costs by at least 10%
- Companies with only basic validation solutions report the financial impact of rental fraud is much higher
- More than 50% report damage to property (55%) and/or reputation harm (51%) resulting from rental fraud
- 40%-50% report fraud impact via criminal activity in a unit (49%), cost of eviction/early lease termination (47%) or loss of good residents due to bad behaviors (42%)
Companies face barriers trying to reduce rental fraud
- Difficult to manage inconsistent processes and standards for each property (40-42%)
- Pressure to maintain occupancy (38%)
- Employees don’t understand the signs of rental fraud (35-36%)
Centralized roles report different challenges from local roles in rental approvals
- On-site staff are not financially motivated to prevent rental fraud (43%)
- Too many people can override decisions to reject applications (41%)
- Potential to be perceived as discriminatory (22%)
Companies with mature tools have better fraud reduction outcomes
- 92% agree that good anti-fraud technology is the only way to reduce renter fraud effectively
- Financial document verification (70%) and background/credit checks (69%) are the most frequently used screening solutions
- Fewer than 1 in 4 (22%) have formal metrics for tracking rental fraud
- 73% believe rental fraud prevention could improve overall financial results by 10-20%
The Solutions
Multifamily operators fighting rising fraud activity will receive timely insights and targeted updates for properties and residents at the upcoming event on March 27, RealPage Innovation Day: Mitigating Today's Risk, where industry and technology experts will highlight specific trends and data from the new study and technology solutions for enhancing protection for registered attendees.
About RealPage, Inc.
RealPage is the leading global provider of AI-enabled software platforms to the real estate industry. By using RealPage solutions for operational excellence in the front office and back office, many leading property owners, operators and investors gain transparency into asset performance with data insights, enhancing experiences with customized tools and improving efficiencies to generate incremental yield. In 2021, 2022 and 2023, RealPage was recognized as ENERGY STAR® Partner of the Year for Sustained Excellence from the Environmental Protection Agency (EPA) and the U.S. Department of Energy. In 2024, RealPage was recognized as one of America’s Best Employers by Forbes and one of America’s Greatest Workplaces for Women by Newsweek. Founded in 1998 and headquartered in Richardson, Texas, RealPage joined the Thoma Bravo portfolio of market-leading enterprise software firms in 2021 to realize faster growth and innovation in serving more than 24 million rental units from offices in North America, Europe and Asia. RealPage has been certified as a Great Place to Work™ in India, the Philippines, the UK and the U.S. For more information, visit RealPage.
Media Contact:
Jennifer Bowcock, Senior Vice President Communications & Creative
jennifer.bowcock@realpage.com
408-768-8221