Apartment Owners Report Surge In Rental Application Fraud
More than 70% of major apartment landlords say they have seen an increase in fraudulent rental applications over the past 12 months, according to a new survey from the National Multifamily Housing Council and the National Apartment Association.
Of the 75 owners and managers who participated in the survey, 93% said they had experienced fraud in the past 12 months. Those who reported an increase estimated fraudulent applications had risen by roughly 40% in the past year, according to the survey released Wednesday.
“There has been anecdotal evidence of the rise in fraudulent activity over recent years, but now we have clear evidence of the staggering impact of these crimes on the rental housing market,” NMHC President Sharon Wilson Géno said in a statement.
“While most renters are honest, those who are not are causing the cost of rental housing to increase for everyone. Additional delays in many jurisdictions in the lease enforcement process, even when there is clear fraud, incentivizes bad actors and means that this illegal behavior costs responsible renters even more. We call on lawmakers and courts to take action that will address this problem.”
The survey results underscore Bisnow's reporting last month that revealed how social media platforms like TikTok and X have allowed different forms of application fraud to proliferate. Identity theft has also been an issue, with Camden Property Trust CEO Ric Campo saying his identity was stolen and twice used by renters trying to secure apartments.
Landlords and other apartment industry insiders say law enforcement has been lax, partly because it can be difficult to determine jurisdiction and even tougher to identify the perpetrators.
“How do you pursue criminal fraud against somebody when you have no idea who they are?” Campo, whose Houston-based firm owns 59,000 units across the country, told Bisnow last year. “They ghost us. Because what’s the recourse? We have to file through the court system, and the court system is clogged.”
The NMHC survey, which was conducted between Nov. 15 and Jan. 9, showed that more than 84% of landlords have received falsified pay stubs or identifying documents, while 70% witnessed identity theft being used in applications.
The landlords said nearly 24% of the evictions they have processed in the last three years were for renters who had submitted fraudulent documents and not paid rent. The average respondent reported $4.2M in bad debt as a result of the fraud, meaning rent they were owed but never paid.
The survey results align with available law enforcement data. Reported internet-based real estate crimes, which include landlord fraud, rose from $213M in 2020 to $350M in 2021 and $397M in 2022, according to the FBI's internet crime reports.
