Landlords: Beware of Identity-Fraud Scams

A Story by Stacy Barton | Updated 10/10/2019 5:25am


An increasing number of applicants are using fake identities to secure leases, according to a report by real estate data firm CoreLogic. The report cites common reasons for the fake identities, including trying to live rent free until evicted and hiding poor credit, criminal history, or other reasons that would make an application unattractive.

Property managers and landlords should be on the lookout for these four types of fraud: 

  • Synthetic identity fraud: In this scheme, the fraudster creates a fake identity either by fabricating all identifying information (SSN, name, date of birth) or cobbling together an identtity of multiple stolen sources.  Real SSNs from children, elderly or deceased people are often used in combination with made-up names and birth dates.  This is the fastest growing type of identity-related fraud.
  • First-person fraud: In this type of fraud, the applicant is acting for another when renting.  The applicant uses his or her real identity on the application, but the applicant is not the person who moves into the residence.  
  • Third-party fraud: Also known as Identity Theft or True Name Fraud.  In this case the applicant assumes the identity stolen from data breaches, mail theft or burglaries.  They use the victim's personally identifiable information including name, Social Security Number and date of birth.
  • Identity manipulation fraud: The fraudster in this case slightly alters some of his or her information in a way that looks as if it could be a typo or spelling error.  Common examples include a SSN that's off by one number, or a slightly different name.  Based on the notion that no news is better than bad news, the goal is to confuse the system so the landlord doesn't see the applicant's true identity.

How Does This Impact The Market?

No industry studies have been conducted on the financial costs and other impacts of identity fraud on the rental property market.  However, CoreLogic surveyed 30 property managers to determine the scope of the problems and costs for evictions related to identity fraud.  More than 75% of those surveyed said they had been victimized by identity fraud,  Costs for fraud-related evictions vary, depending on the eviction laws of the state where a property is located.  Some states allow immediate evictions, while in other states the fraudsters may be able to live rent-free for up to a year.

Evictions Related to Identity Fraud

Average length to eviction:  3 mos.

Average costs per eviction:  $5,000 to $10,000

Costs Include:  lost rent, attorney fees, court costs, law enfircement servcie fees, locksmith, cleaning fees, proeprty repair and replacement costs, storage fees, remarketing, labor and operational costs

 

Technology can assist Landlords with specific scoring programs that have been developed to help combat the identity fraud issue, such as ID Score by CoreLogic.  If you are an invidual landlord who is looking to put their home or investment property up for lease, ensure you are able to obtain your applicants full credit report, criminal background check, and confirm their social security number against the national database.  Personally verify two years of past rental history, verify their current employment and ask for their most recent pay stub.  If your applicant does not have a credit history, this may be a red flag, especially if they are older, so ask for additional identification if needed.  A little extra due diligence can save you some expenses and a big headache down the road.

 

(Some information contained is this article provided by Texas Realtors)

 

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