The demands of digital transformation have impacted our lives and businesses in many ways. For the residential rental industry, this means more and more applications being processed online. An improvement from an efficiency standpoint, however, as the credit industry is already too aware, online applications' anonymity has opened the floodgates for fraud. 

The reality is that some potential renters will never pass a background check or meet employment or income requirements, but this doesn't mean they will stop trying. The reality is, the apartment industry is now, more than ever, at a higher risk.

Applicant fraud opens the door to liability 

Fraud cases are about faking one’s identity as a prospective tenant. Fraudsters use someone else's personal information – i.e. a driver's license, social security number or other information to invent a new identity. This is referred to as “synthetic fraud”. This type of fraud - “synthetic fraud” involves combining stolen information and building a credit profile for a person who doesn't exist. This new profile is then used to open credit cards, buy merchandise and do other illegal things….like applying for residential apartment applications. Rental homes become a part of their crime, where they work to validate fake profiles. Eventually these fraudsters use these profiles as a final drop for all of their spending, then skip out in the middle of the night.

More often than not, these residents – i.e. fraudsters -- become an “eviction” for residential renters within the first year of becoming a resident. Because they applied using a synthetic ID, there are virtually no repercussions for failing to pay on time or having large rental balances reported to a credit agency, costing residential renters significant amounts of money.

In addition, fraudsters engaged in criminal activity are, unsurprisingly, more likely to be bad residents. If they'll defraud an apartment community, what will prevent them from doing the same to fellow residents? In extreme cases, the safety of residents might be at risk. After all, there is a reason that these individuals cannot qualify for an apartment. 

However, fake or altered Social Security numbers can be tricky for fraud offenders to utilize in the long term. Fake pay stubs are easier to generate online and easier to get away with. Thorough tenant screening may seem like a tedious and even insignificant process but lack of it can adversely affect an apartment community's bottom line. 

A critical tool for apartment operators is awareness. The more often leasing teams closely scour applications and can diagnose warning signs, the less likely one of these fraudulent applicants will have a home in a well-managed community. Look into all of your options for fraud detection.