Rental Scams – How to Spot Them and Stop Them
Published on: Tuesday, February 18th, 2020
Source: Rentec Direct
Author: Kaycee Miller
The need for housing and the instability of some renters’ financial or criminal past can lead people to do whatever it takes to secure a rental property. Unfortunately, this means property managers regularly encounter lies and deception from future or current tenants.
Would-be-tenants have the opportunity to deceive a trusting landlord even before signing a lease by lying about income and job stability on rental applications. Pets or the number of secret tenants are other common lies heard by landlords.
These lies create potentially risky situations or real financial obligations to a landlord in the form of hundreds of dollars in missed rent payments or property damage. To protect themselves and the investment property, managers and landlords are advised to conduct thorough tenant screening on all applicants and trust real credit, background and eviction reports rather than a handshake.
While landlords and property managers experience the most risk for the potential to get burned by an irresponsible or cruel tenant, renters have also fallen prey to scammers and deceivers looking to take advantage of their trusting nature.
Online rental posting websites like Craigslist, Zillow, Hotpads, etc. have seen an increase in rental scams that target renters. With 80% of renters using a computer to search for their next rental home, these rental listing websites are extremely popular. But the anonymity of the Internet has made some greedy criminals take advantage of trusting renters who need housing fast or want to take advantage of a good deal.
To combat the occurrence of fraudulent rental listings, most rental listing site actively monitor their postings to catch, remove and report scams. They also rely on their vast user network to report fraud for review.
Despite attempts made to prevent all scammers from reaching consumers on rental listing networks, some fraudulent postings still make it through the cracks. To protect the market, property managers should be aware of the types of rental scams happening so they understand what their pool of potential renters are dealing with when evaluating vacancy postings.
HOW RENTAL SCAMS WORK
Scammers prey on desperate or trusting renters who want to take advantage of a too-good-to-be-true rent price by presenting a vacancy ad on a reputable rental listing sites and asking for security deposits and first month’s rent in exchange for keys. Once the scammer secures the money, they disappear and the tenant is left with a lighter wallet and still no place to live.
Scammers create rental ads with real or fake information about homes that have been previously listed for rent or are up for sale. Template-like emails are exchanged between a prospective tenant and the “owner” or “landlord” claiming they are out of town for a job or overseas for missionary work.
The scammer will typically present a long story about why a home is for rent and avoid responding to detailed questions from the prospect. Despite attempts to see the property, the scammer will explain that the home must rent site-unseen due to their current long-distance living situation. The scam continues by agreeing to provide the prospect with keys once a wire transfer has been made for the security deposit and first month’s rent.
Wire transfers through companies like Western Union or MoneyGram are untraceable and non-refundable, which is why they are preferred by scammers and should be a HUGE red flag to prospects.
Rental scammers try to include detail, mention lawyers or agents and added security measures, like address verification, to build trust and authority with their victim. At the same time, they remain vague and distant about property specifics or reasons for not accepting alternative forms of payment.
Some scams are cookie cutter with the same property being posted at multiple locations around the country and the exact same emails being sent to prospects.
- Check out this one former real estate agent’s experience trying to catch a rental scammer in the act, and see the extent of how instant scammers are and how easy it might be to fall for it if you do not know which signs to watch out for.
Other rental scams that target tenants can be more in-depth and actually involve con artists presenting themselves as a landlord and showing vacant properties to collect security deposits and rent in cash and then disappearing, like one woman in New York that even received working keys to a unit that she had no claim to after forking over lots of money.
TENANTS ARE NOT THE ONLY TARGETS OF RENTAL SCAMS
There have been cases of landlords that fall victims to online scams as well. This can happen by a potential tenant who mails a check for more than the original move-in costs and asks for a refund of the extra money. A trusting landlord may refund the money before the check clears, and wind up with a bounced check and a negative balance.
WHAT YOU CAN DO AS A PROPERTY MANAGER?
To help protect the industry, report any listing that you come across that presents red flags of a potential scam. Add watermarks or your business’s brand to images of your rental property so deter scammers from using your property’s photos in their scams. Always screen your tenants to verify an applicant’s identity and reduce your potential risks. And always wait for a check to clear before refunding over-payment or handing over the keys.
Make sure you are working with reputable companies that actively monitor their website’s content to prevent fraudulent postings. If your property management software posts your vacancies to a rental listing syndication network, you should be confident that they are combating listing fraud to protect your properties and the industry.