It’s a sad fact of life in the multifamily industry.

From time to time, prospects will submit fraudulent lease applications to try to secure apartments they wouldn’t be able to get by being honest. From providing counterfeit pay stubs to filling out leasing applications with fake names and Social Security numbers, applicants use many different methods to scam the system. 

Perhaps the applicant doesn’t make enough money to qualify for a lease, or maybe their rental history is marked by evictions that would be a deal breaker. Maybe the applicant has stolen someone’s identity and is using that information to apply for a lease.

These certainly are sobering scenarios to contemplate, but apartment operators everywhere must look out for fraudulent lease applications. If they succeed, these scammers can create misery for operators by not consistently paying their rent, skipping out on their leases, using their units for criminal activities like dealing drugs, or destroying property.

Fortunately, operators are far from defenseless in the face of such activity. Below are some suggestions for maximizing your community’s chances of catching a fraudulent applicant.

Be skeptical and verify

Leasing teams obviously shouldn’t be hostile to applicants. But they also shouldn’t take prospects’ statements and applications at face value or assume they have good instincts about prospects’ truthfulness. Leasing teams should be fully committed to thoroughly vetting applicants and independently confirming the information prospects provide. Adopt a mindset of “verify, verify, verify.”

Operators and their screening providers should pull credit reports and review them thoroughly, as well as conduct comprehensive criminal background and eviction history checks.

Dishonest applicants can produce fake pay stubs and lie about their employment history. Operators and their screening partners should cross-reference employment information provided by an applicant with the employment information listed on the applicant’s credit report. 

Obviously, the recommendations above are fairly broad. Innovative multifamily screeners are constantly developing their own methods for spotting fraudulent applications, and operators should make sure their screening providers have sufficiently sophisticated processes and technologies in place.

Don’t overlook rental payment history

How applicants have honored their leases in the past is an extremely powerful indication of how likely they are to meet the terms of any future lease. Unfortunately, a collection proceeding can take some time to show up on a person’s credit report, and that person may dishonestly apply for a new lease in the interim.

Manual rental payment history checks conducted by onsite leasing agents are notoriously prone to producing incomplete or inaccurate information. On the other hand, rental payment histories that are automatically and continually gathered from operators by a third party and made available to other operators provide accurate, up-to-date information that can be invaluable when examining an applicant’s background.

Be unconventional
There are other off-the-beaten-path screening techniques that complement some more traditional tactics. Such techniques can include asking for letters of recommendation to indicate if the applicant will pay rent on time and follow community rules. Of course, you’ll need to vet these letters and their writers.

Also, consider requiring cosigners on a lease. This can protect your community’s revenue, and getting someone to cosign can reduce the risk of a fraudulent applicant proceeding. Again, operators will need to work diligently with their screeners to verify a cosigner’s identity and suitability. 

Allowing fraudulent applicants into your community can wreak havoc. However, with a comprehensive and innovative resident screening process, operators can stop scammers from moving in in the first place.