Fraud is an increasingly pressing issue in the multifamily industry, causing significant financial losses and operational challenges for property managers. In a recent webinar hosted by Entrata, Chelsea Hansen, a product marketing manager, and Kyle Nelson, Vice President of Strategic Partnerships at Snappt, discussed the latest trends, tools, and financial implications of fraud in multifamily.

The Rise of Fraud

Nelson, a veteran of the multifamily industry, shared that fraud is prevalent across the US, with Snappt's data revealing an average fraud rate of 8% across analyzed documents, reaching as high as 20% in some markets like Fort Lauderdale. This means that nearly one in five applicants submitting fake documents during the application process.

Fraudulent activities range from using PDF editors to alter documents to purchasing fake IDs and pay stubs from online platforms. Additionally, third-party fraud involving "keys for cash" schemes and synthetic identities pose significant risks for property managers.

The Cost of Fraud

The financial impact of fraud on multifamily businesses is substantial. Evictions, often resulting from fraudulent applications, can cost an estimated $7,500 each. By preventing even a few evictions per month, the return on investment for fraud detection tools becomes significant. Entrata's clients have reported cutting delinquencies by as much as 75% after implementing screening tools, highlighting the potential for substantial cost savings.

Combating Fraud with Technology

The partnership between Entrata and Snappt offers a powerful solution for combating fraud in the multifamily industry. Snappt's AI-powered software can instantly detect financial fraud in applicant documents, saving leasing teams countless hours in manual review. This integration allows for a more seamless and efficient screening process, reducing the risk of fraudulent applications and subsequent evictions.

Conclusion

Fraud is a pervasive and costly problem in the multifamily industry, but it's not insurmountable. By leveraging technology and implementing effective screening tools, property managers can protect their businesses, minimize financial losses, and ensure a safe and secure community for their residents.

As Nelson aptly stated, "If you don't have some type of fraud detection tool on your property, you're leaving yourself vulnerable to bad actors." Don't wait until it's too late. Take proactive steps to combat fraud and safeguard your multifamily business today.

Learn more

Learn more about how the partnership between Entrata and Snappt can help reduce fraud at your properties, request a demo today.