Five Ways to…Prevent Rental Application Fraud

Have you browsed the October issue of UNITS? This month, their article about preventing tenant application fraud caught our eye. There’s no doubt that rental application fraud does happen–especially when vacancies are lower, with apartments harder to find. But there are some simple things you can look out for when screening potential tenants–here are our five favorite tips for weeding out fraudsters before they become potentially less-than-perfect tenants.

1. Insist on seeing a real photo ID–not a copy or faxed version.

While there’s no question that the digital age has made our business lives infinitely easier, there’s just no excuse for accepting a photocopied, faxed, or e-mailed copy of an applicant’s photo ID. It’s simply too easy these days for someone to doctor the reproduction they send you, altering key information to line up with their story. State-issued  driver’s licenses and identification cards are now printed with an arsenal of security measured intended to make alterations and forgeries prohibitively difficult. And when you view an ID card, feel free to take your time–if it’s from your state, does it look like yours? And if it’s out of state, you may want to ask a few additional questions (or look up the state’s ID design and security measures online).

2. Charge an application fee.

While an application fee can be frustrating for a tenant applying for multiple apartments, it provides another layer of security for the landlord or property manager. Fraudulent applicants will often apply at any and all apartments they come across that do not charge an application fee–since they have nothing at all to lose if they subsequently have to walk away. Application fees also signal a small measure of commitment from a potential tenant, signaling that they’re interested enough in the apartment to pay to be considered–and the time you spend on their background and credit checks will not be wasted. If you prefer not to charge much of an application fee, consider waiving the fee upon the signing of the lease, or deducting it from the first month’s utilities–that way both landlord and tenant are happy.

3. Google the prospective tenant’s place of business.

Look familiar? Street View can verify an address in just a few seconds.

Is it becoming harder to be a casual fraudster in this digital age? When an employee turns in paystubs or lists their place of business, go ahead and Google the name, address and telephone number. Ensure that the phone number is actually linked to the business name (as it will be for all but the smallest operations), and consider viewing the business address on Google Street View for an added measure of security, ensuring that it’s not a vacant lot or an unrelated gas station. Also, note that many businesses register with the Secretary of State–when in doubt, you can check their website to be double-certain of legitimacy.

4. Double-check their tax forms.

First of all, you may want to require that prospective tenants turn in either a W2 or Form 1099–just about anyone who works for a paycheck will receive at least one of these each year; if a prospective tenant is unable to provide one of these, it may send up a red flag. Secondly, when looking over an applicant’s tax returns, ensure that they are signed by the tenant, and check to see if the address listed on the return matches the tenant’s current address–if not, find out why. If you’re unsure, you may want to request an income verification faxed directly from their employer–and look out for faxes that don’t look like they came directly from the business in question.

5. Beware of blank credit reports.

Did you know that not all people who have a blank credit history truly have no credit? From the UNITS article: “There is a technique called freezing or locking one’s credit report that can make it appear there is no credit history for the applicant to some screening-report providers.” While the occasional college kid won’t yet have a credit history, most older adults will–but if they have successfully frozen their credit history, many credit report agencies will report that they have no credit history at all. A blank credit report? Automatic red flag.

Scary, huh? OK, so maybe we won’t be dressing as rental application fraudsters for Halloween…but it’s definitely something to avoid! For a full list of UNITS’ original 27 tips, click here; in the meantime, do you have a surefire tip for recognizing application fraud? Post it in the comments!

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