How do you know if someone is who they say they are? Or that they can afford to pay rent on time every month? Application fraud detection in property management is always a priority, but it’s an even bigger issue given that so many interactions occur now online. Not to mention, fraud is more common than some people realize. And given that property managers spend an average of $7,500 per eviction, it can be costly to not take every measure to prevent rental fraud.
Sometimes, simply presenting automated rental fraud prevention technology in the online leasing workflow will deter would-be fraudsters. But that’s not always enough, especially because you never know how someone is going to attempt rental fraud, such as:
- An applicant poses as someone else
- A new, false identity or identification is presented
- Fake income documents are presented
- A real identity is used, but some details are changed to help avoid detection
Let’s go over some simple, proven ways to prevent rental fraud at your multifamily properties.
1. Verify identities
When used alongside a biometric selfie match, ID verification is a reliable indicator that someone is who they say they are. It’s been done successfully for many years.
Pros: Everyone has basic identification, and biometric matching technology is reliable and widespread.
Cons: Matching an ID card to a face requires the applicant to have and use a smartphone or tablet. Plus, not everyone is great at taking and uploading photos.
Tip: Some people alter their data to prevent fraud detection. The middle name or initial is an easy way to catch this, so ask applicants to provide their full legal name.
2. Use advanced document authentication
Documents can be hard to verify manually. How do you know the information is 100% true and accurate? Unless you are also a licensed private investigator and have all the time in the world, technology is your key to quickly and accurately make sure the documents provided to you by prospective renters are authentic.
Pros: Document authentication technology checks for document elements such as visual discrepancy, font detection and text insertion.
Cons: None! Keep in mind that document authentication tools are not intended to replace resident screening solutions but to complement them. Comprehensive screening should include elements beyond fraud detection, such as criminal screening and credit checks.
3. Check credit bureau fraud warnings
Credit bureaus offer notifications and warnings about recent fraud types and instances, so you can stay on the lookout when screening applicants. It’s all too easy for leasing staff to miss fraud warnings on a credit report.
With the right software, when a credit alert appears, the screening will pause until an authorized employee reviews and approves the application. This gives you the opportunity to pause the approval process until the applicant can provide a copy of their social security card.
Pros: Each bureau provides alerts related to identity. For example, an initial fraud alert lets you know that the applicant’s identity may have been stolen. Keep in mind that from such an alert, the applicant could be the victim or the perpetrator.
Cons: Messages can be ambiguous, and you may need to know where to look to find relevant messages.
4. Use bank account linking/open banking
Open banking lets financial data be shared between banks and third-party services. Banks have traditionally kept financial data within their own protected systems for fear of risking sensitive financial customer data, but open banking allows customers to connect their bank to additional services through other applications. For example, open banking allows you to use your banking credentials on your brokerage app to view both accounts on one dashboard.
Pros: Current ID requirements to open a bank account are rigorous, so you can have high confidence in the accuracy of the applicant’s information.
Cons: You only know that someone has the correct bank credentials. This method does not verify income, and some consumers are not yet comfortable with this new technology.
5. Review payroll databases
Leverage national payroll databases and automate the income verification process, increasing accuracy and saving applicants time.
Pros: Property managers get instant results, zero friction and high confidence.
Cons: Top sources only cover about 50% of the renter population (which is actually high, but it’s not perfect).
6. Verify payroll accounts
You can go straight to the source to check someone’s income and employment records.
Pros: Ensure accuracy by extracting pay stubs from first-party sources (e.g., ADP).
Cons: This method doesn’t cover self-employed individuals, and many people don’t know their login credentials.
No escaping it: We’re living in a digital world
Technically, you could work around online identity fraud by eliminating online leasing altogether. But is that realistic? According to the 2024 NMHC and Grace Hill Renter Preferences Survey Report, only 19% of renters prefer face-to-face leasing. The survey found that 50% prefer online leasing, and 30% could go either way. You’re unlikely to remain competitive without online leasing. That means you truly need advanced screening tools to prevent rental fraud at your multifamily properties.
Clients know best
We spoke to Yardi Breeze client Paul Vengilio, who told us that technology increases the risk of rental fraud at his properties, but it also provides the solution. “Yardi Breeze has really opened up our eyes, giving us the ability to do all kinds of background checks and identity verifications,” he said.
Rental fraud prevention tools available to you
We mentioned some of the rental fraud prevention tools available to multifamily properties, so let’s take a closer look at your options.
For industry-standard screening that meets compliance requirements, Breeze users have the option to add ScreeningWorks Pro to their online leasing workflow. It automates screening during the application process and completes criminal and credit checks in less than a minute.
We also offer ScreeningWorks Pro ID Verify, a sophisticated solution that uses computer vision and artificial intelligence to automatically classify, extract and authenticate ID documents in seconds.
In terms of income verification, ScreeningWorks Pro Income Verification is fast, accurate and able to access 350+ million records from over 80% of Fortune 500 companies and federal employers to verify income for individuals applying to live in a rental property.
We recognize that basic screening tools aren’t always enough, so we partnered with Snappt to offer ScreeningWorks Pro Document Authentication. Snappt identifies fraudulent documents with AI technology that determines the authenticity of income documents. It provides a ruling on the documents to your leasing team, lowering the risk of financial loss, improving operational efficiency and helping maintain compliance.
Final words of wisdom
Small property management businesses and IROs can be disproportionately affected by the consequences of renter fraud. If you run a small business, make sure you have top-of-the-line screening in place.
Do you have 25 minutes to learn more about how to prevent rental fraud at your multifamily properties? Check out this session by Kyle Nelson, vice president of strategic partnerships at Snappt.
