The escalating trend of renter fraud
Recent data unveils a worrying trend: multifamily risk experts TheGuarantors has seen a startling 164% surge in denials stemming from fraud in the past 18 months. In addition, according to Snappt, a fraud detection company, as many as 1 in 8 rental applications contain some type of fraud. Understanding and mitigating this threat is paramount for multifamily housing professionals to protect their NOI and communities.
Understanding the drivers of fraud
Digital evolution of multifamily: The industry has brought previously in-person elements of the leasing process online. With virtual tours and online applications becoming mainstream, it's easier for fraudsters to exploit the system.
COVID: The pandemic catalyzed a surge in virtual renting, creating vulnerabilities that scammers are quick to capitalize on.
Proliferation of fraud tools: A quick Google search returns established businesses that sell fake documents, including bank statements and pay stubs.
Economic desperation: With higher rent and stagnant income, renter desperation can further fuel fraudulent practices.
Eviction moratoriums: Covid-era eviction moratoriums have inadvertently created opportunities for fraudulent renters to exploit the system.