Fraud is a growing concern for property owners and managers. With the rise of digital applications and sophisticated fraudulent tactics, it's more important than ever to be vigilant. But exactly how common is fraud in the multifamily industry?

A recent survey conducted by TransUnion found that 60% of property management companies experienced fraud at least once in the past two years. And more than a third of those companies stated the fraud wasn’t identified until after the applicant had already moved in. The same study also discovered that 58% of the surveyed companies didn’t use any outsourced screening services or technologies, relying solely on manual resident screening processes and in-house employees.  

With application and rental fraud so widespread, it’s essential to take the time to understand what it is, how you can build a first line of defense through your screening process, and best practices to prevent fraud going forward.

Understanding Application Fraud

Fraudsters grow more sophisticated every year, employing advanced tactics to mislead property managers. These methods of deception include identity theft, falsified financial documents, and the use of fake or stolen social security numbers. Understanding these techniques is the first step to safeguarding your property.

Implementing Thorough Resident Screening

Because your company’s operations are unique, thorough screening—especially a multi-layered approach—is one of the most effective ways to prevent fraud. This involves verifying the applicant's identity, income, background, and rental history. Utilizing technology that can detect fraudulent documents like pay stubs and bank statements can reduce friction for your teams and residents during the screening process. A multi-layered approach can also significantly reduce the chances of accepting fraudulent applications.

Automated screening systems that use machine learning algorithms can analyze application data for inconsistencies and red flags. These systems compare information across various databases to verify the accuracy of the applicant's information.

Best Practices for Fraud Prevention

• Verify Identity: Always verify the applicant's identity using government-issued identification and cross-checking with other documentation. When using the PreciseID tool inside Entrata, you can ensure identity elements are validated and verified without any extra steps or duplicate data entry.
• Incorporate Document Verification: Solutions like Snappt's AI-enabled fraud detection technology integrate with Entrata and allow income documents like bank statements, pay stubs, and hundreds of other document types to be analyzed quickly and effectively, stopping fraudsters before they step foot on your property.
• Check Income: Implement technology that can easily verify an applicant’s income and analyze documents for signs of forgery. These tools can calculate income, connect to bank and payroll providers, and detect inconsistencies in fonts, formatting, and other details that are often missed during manual reviews.
• Review Rental History: Speak with applicants’ previous property managers to confirm rental history. This can help identify patterns of behavior that might indicate fraud or other concerning issues. Screening technology like ResidentVerify automatically searches through rental history based on criteria that fits your community and remains up to date with fair housing compliance.
• Educate Staff: Ensure your property management team is well-trained in identifying and preventing fraud. Regular training sessions on the latest fraud tactics and prevention methods can keep your team sharp and vigilant.
• Stay Updated: Fraud tactics are always evolving. Stay informed about the latest trends and technologies in fraud prevention by subscribing to industry publications and attending relevant conferences and webinars.

Learn More

Check out Entrata’s partnership with Snappt to see how you can integrate seamless screening workflows and reduce application fraud.