As a multifamily property manager, there\u2019s no question that you need systems in place that can help you stop property management fraud before it happens. After all, whoever originated the phrase \u201cthere\u2019s no such thing as bad publicity,\u201d clearly never saw his or her property on the 6 o\u2019clock news under a headline of \u201cFRAUDSTER EVICTED AT LOCAL APARTMENT.\u201d<\/p>\n
Fraud occurs across many industries, and multifamily is no exception. The majority of property managers become aware of fraud in their community within the first six months after the resident moves in. Addressing the situation can lead to eviction, disputes, and a bad reputation for your apartment community. It\u2019s crucial to understand the ways in which fraudsters can sneak their way into your properties and how to prevent them from doing so.<\/p>\n
When a prospective renter completes an application for an apartment using false information, this is considered rental fraud. The property leasing office is responsible for evaluating the application and determining if the information is valid. Insufficient screening processes can result in fraudulent residents living in an apartment community for free, or on someone else\u2019s dime.<\/p>\n
Forged documents, missing information, and identity theft are key pathways that fraudsters can use to get into your multifamily community. While some of these vulnerabilities may seem like relatively small access points, ApartmentList<\/a> actually estimates that 5.2 million renters in the United States alone have lost money due to rental fraud.<\/p>\n Presenting fake documentation is a common tactic that fraudsters use as part of the apartment application process, particularly regarding paystubs. Did you know that \u201cfake paystub for apartment\u201d is such a high-volume search term that it shows up in Google\u2019s Autofill feature? While some fake documents might fall on the \u201cunbelievable\u201d side of forgeries, others are quite convincing and reasonably difficult to detect. Even face-to-face interactions with applicants could be fraudulent, and as such, it\u2019s important that your property prepare for these situations by updating your resident screening systems and training your leasing staff to spot fake documents.<\/p>\n In recent years, the application process for multifamily prospects has largely moved online, and fraudsters have come to take advantage of this. Without the proper systems in place to verify identity, your property could end up with leases signed by non-existent residents. These residents could be people who have had their information stolen, or they could be entirely made-up people, created for the sole purpose of building credit and passing as someone else.<\/p>\n Stopping fraud before it happens is based almost entirely around recognizing flags at the leasing level, to prevent fraudsters from moving in to your community. The best way to pick up on \u201cred flags\u201d that may signal fraud is to add multiple layers to the fraud detection processes. Here are a few things to be on the lookout for:<\/p>\n 1) Duplicate addresses \u2013 Some fraudulent applications may have the same address used on multiple applications. Recognizing these duplicates can help you stop a fraudster before it\u2019s too late.<\/p>\n 2) Questionable personal information \u2013 Credit reporting agencies can be used to look up prospects, cross-reference the application data, and verify their cell phone number against carrier information. If a fraudster has used a burner phone number on his or her application, this check will reveal any discrepancies between the number and the affiliated carrier.<\/p>\nHow to prevent property management fraud in your multifamily community<\/h3>\n