For property managers, risk management and fraud prevention are seemingly jobs that never end. New threats arise and old threats evolve. Similarly, new regulations are enacted by a variety of federal, state and even local agencies, and keeping up with changes can be difficult.
Technology and data can help address property risk management in the real estate enterprise. When risk is managed and fraud is eliminated, both the property and residents benefit and create a stronger, safer community.
How technology helps reduce property management risk
As the pandemic’s economic impact continues, bad actors are increasing their use of technology to perpetuate fraud. In order to secure housing, they are using false forms of identification, fake pay stubs, and stolen identities. Fortunately, technology exists to identify these increasingly common types of fraudulent activity and further mitigate risk.
- ID verification – Identifying false forms of identity, like drivers’ licenses and passports, can stop a bad actor early in the process. Often required as part of a tour process, identification can now be quickly validated, in person or online, to deny a fraudster the ability to engage with the property, ensuring site staff do not spend time on a fraudulent applicant and that they are not put at risk during a tour with someone who is misrepresenting themselves.
- Screening – Credit and background screening processes continue as table stakes in residential leasing processes. While these common screens are being processed, additional validation is now available. Understanding if the applicant’s credit file has had recent fraudulent activity can be a key indicator of potential issues, as can an applicant’s inability to perform a two-factor identity verification using their mobile device.
- Income validation – Validating income is also becoming more challenging as fake paystubs and instruction on how to doctor paystubs are available across the internet. Google “fake paystubs for apartment” and you might be surprised how easy it is to misrepresent one’s income. Emerging products to validate income are the next clear wave of fraud prevention and they are currently making their way to market.
- Insurance – In residential markets, establishing a resident insurance compliance program helps reduce risk and minimize loss by closing gaps in coverage, which can occur when new residents move in or cancel a policy. Conveniently, renter’s insurance policies can be paid along with rent on a monthly basis.
More technology savvy and sophisticated fraudsters drive more sophisticated detection capabilities. In this ongoing battle, landlords have an advantage. Landlords have historical data in renter performance and can utilize data, analytics and artificial intelligence to better predict outcomes based on applicant profiles.
Learn more about risk management for property managers in this webinar.