Rental Application Scams: Beware Of Sympathetic Fraud

For a property manager, distinguishing between careful screening and falling prey to fraud can be very challenging. A recent survey by the National Multifamily Housing Council found that 93.3% of owners and managers had encountered fraud in the last year. This high rate of rental application scams impacts profits and your overall business.

Verifying information through a third-party source is an essential part of processing rental applications.

But what if that third-party source is committing fraud along with the applicant?

When people think of fraud, they usually associate it with notorious criminals such as Bernard Madoff or Charles Ponzi. However, fraud is not limited to these larger-than-life figures. It can come from unexpected sources, such as an applicant’s loved one, a family member, or a friend. And when that happens, it’s much more difficult to detect.

We’ll dive into this variation of housing scams and how you can protect your property management business from potential renters who do not have legitimate income to pay rent.

What is a sympathetic fraud rental scam?

Sympathetic fraud involves committing fraud in the name of helping someone obtain housing they may not otherwise qualify for. This type of fraud poses a significant threat to both sophisticated investors and “mom and pop” investors alike because it is hard to detect. The losses resulting from sympathetic fraud can come in the form of lease violations, damages, and evictions.

Examples of sympathetic fraud rental scams

To protect your property owner and keep rentals occupied with qualified tenants, be aware of how to avoid rental scams that use sympathetic fraud. Examples include:

1. Fake “legitimate” pay stub

We’ve all heard of applicants using fake paycheck generators to create realistic paycheck PDFs. But what if an applicant involves a sympathetic friend or family member who can create a legitmate paycheck or check stubs for the applicant?

These documents may be on company stock or even via their legitimate paycheck provider. But many times, the total income magically meets or exceeds the applicant’s requirement for a position that normally wouldn’t generate this amount of income.

2. Fake “legitimate” hire letters

Sympathetic fraud does not always happen with small, locally-owned businesses. There are cases where sympathetic friends of applicants who are HR Managers for large companies commit fraud.

These fraudsters cannot easily produce a paycheck for the applicant, but a Hire Letter is a different story. This fraud is even more difficult to uncover as the screener may get stonewalled when trying to verify the information at a big company.

3. Fake “legitimate” rental history

Finally, the most common form of sympathetic fraud is verification of residence fraud. The “VOR” links that many screening companies provide are not useful as they do not include information about the landlord’s relationship to the applicant.

It is essential to use other tools available to verify as much third-party information as possible to determine if the applicant lived in the places they claim to have lived.

Using Rentzap for the tenant screening process

Don’t be a victim of a rental scam. Rentzap protects you as a property manager by:

• Professional underwriting: Rentzap’s team of expert underwriters provides a thorough screening process, from application to approval.

• Qualification assurance: Every approved applicant meets our standard qualifying criteria.

• Streamlined applications: Simplify your rental applications with a process designed for ease and efficiency, reducing the stress of managing multiple applications.

Wrapping up on potential tenant rental scams

A rental agent or property manager needs to know the triggers to spot these common cases of sympathetic fraud.

Rely on Rentzap’s managed screening service to avoid making a bad decision that leads to missed rent payments, evictions, and possibly property damage. We have the expertise to verify information through multiple third-party sources.

Without these tools and techniques, even some of the most experienced providers may end up with unemployed or underemployed residents.

FAQ on rental application scams

How can you tell if a rental application is real?

To determine if a rental application is real, check for consistency and accuracy in the information provided by the applicant. Verify employment and previous rental history directly with the sources, not just through the contacts given by the applicant. Look for signs of fabricated documents, such as inconsistent fonts or numbers that don’t add up.

How to tell if proof of income documents are fake?

To detect fake income documents like bank statements, check for mismatched fonts and spelling errors. Review the transaction history for repetitive or unusually rounded figures. Confirm their authenticity by verifying directly with the bank or using verification services.