Searching for an apartment should be fun and exciting, but rental fraud can turn a positive experience into a negative one. While most listings are legitimate, it’s important for renters to learn how to identify and avoid fraudulent listings and rental scams.
A recent Apartment List survey of over 1,000 renters found that 43.1 percent of renters have encountered a listing they believed was fraudulent, and 6.4 percent of renters have lost money due to a rental scam. Younger renters, aged 18 to 29 years, are 42 percent more likely to have lost money from fraud, probably due to a lack of renting experience. Nearly 90 percent of renters who lost money from fraud changed how they search for rentals to avoid being scammed again.
Read on for our top tips on avoiding fraud so you don’t have to learn the hard way.
What is Rental Fraud?
Rental fraud occurs when someone claiming to be a property manager or landlord, in certain cases the actual landlord, tries to rent a property that doesn’t exist, isn’t their rental or is substantially different than advertised. Scammers try to collect an application fee, security deposit or rent before the prospective renter recognizes the scam. When searching for their next home, renters are putting a lot of sensitive information on the line and must pay a hefty security deposit up front. Access to such critical information and funds can easily tempt scammers, so renters should get smart and look out for potential schemes while making a move.
What are the Most Common Types of Rental Fraud?
Knowing common types of rental fraud is the best way to avoid scams. We asked the renters surveyed to categorize their fraud experiences, and we ranked these common types of rental fraud schemes from most common to least common:
- Bait-and-Switch: A different property is advertised than the available rental, and the scammer tries to collect a deposit or get a lease signed for this property.
- Phantom Rentals: A scam-artist makes up listings for places that don’t exist or aren’t rentals, and tries to lure renters with low prices.
- Hijacked Ads: A fake landlord posts advertisements for a real property with altered contact information. Homes for sale are often re-listed as rentals in this type of fraud.
- Missing Amenities: A real rental is listed as having features and amenities it lacks in order to collect a higher rent, the rental market equivalent of catfishing in online dating. The leasing agent tries to get renters to sign the lease before they notice the missing amenities.
- Already Leased: A real or fake landlord attempts to collect application fees or security deposits for a rental that is already leased.
Note that in many of these fraud schemes, the scam artists use slightly altered real listings, making fraudulent listings harder to detect. Visiting a property can help identify scams, but renters moving from other cities often sign leases sight unseen. If you are unable to visit a property, ask a trusted friend or family member to visit for you.
What Do Fake Listings Look Like?
Fraudulent listings tend to look very similar to legitimate listings, which is partly why so many renters fall for scams. In some instances, scam artists copy real listings and just change the contact information, making fraud difficult to detect.
Here are a few tips for identifying fake listings:
- Listings Lack an Address or Pictures: If a listing lacks an address or photos, it is more likely to be fake. If an address and exterior pictures are provided, you can verify the rental using Google Street View. Another step that you can take to avoid fraud is to search the address for listings on other sites. If you find listings for the same rental on various sites, make sure the contact information and listings details are the same as the listing you’ve seen.
- Too-Good-to-Be-True Prices: Scammers will often list properties at below-market value in order to attract more interest from renters. For perspective, take a look at median rents in your city here. If you find an apartment at prices much lower than comparable rentals in the same neighborhood, the listing is more likely to be a scam. If you pursue the rental, make sure to visit the property before sending any payments.
- Advertises No-Screening Process: In order to attract renters with limited options, for example, those with poor credit or a criminal record, scammers will advertise apartments with no screening process. Be wary of rentals with no background and credit check requirement and make sure to verify the property is legitimate before paying a deposit.
How Can I Avoid Rental Fraud?
Even if a listing looks completely legitimate, there is still a small risk of fraud. Scammers try to collect money up front, often before a prospective renter has viewed the apartment. Verify a properties legitimacy before making a payment.
Take the following steps before making any payments to avoid losing money from a rental scam:
- Visit the Property in Person: Visiting a property is the best way to detect fraud because you will be to make sure the apartment matches the listings details and pictures. If you don’t live nearby, find someone you trust to visit the property.
- Verify the Landlord: In some cases, scam artists will gain access to an apartment that isn’t theirs to rent, for example by breaking a window. You can generally verify ownership of the property by looking up city records or talk to the building’s manager if you are renting a condo or subleasing.
- Ask to Speak to Current Tenants: Speaking to the current tenants will help you confirm information provided by the landlord. Plus, they can provide additional information about the rental, for example, letting you know if there are any issues, such as a broken appliance.
- Rent from Reliable Property Management Companies: If you are particularly worried about fraud, or moving into an apartment sign-unseen, renting from a large, well-known property management company may be your best bet. Larger properties generally have trusted leasing agents and follow a set procedure so you can make sure you’re not being scammed.
- Do Not Pay with Cash or a Wire Transfer: Scam artists generally ask for payments in cash or via wire transfer because this form of payment is impossible to track. When possible, use a credit card, or if that’s not possible a check. In one common rental scam, someone poses as a landlord living out of the country, often as a missionary. They ask for a wire transfer of the security deposit or rent and promise to send keys.
- Be Careful with Confidential Information: Rental applications generally require providing confidential information, such as a social security number or bank account number. Verify the legitimacy of a property before providing this information to avoid identity theft.
- Confirm Prices and Features Before Signing a Lease: Upon moving in, sometimes tenants find that advertised amenities are missing or supposedly included expenses (eg.: utilities, parking) are not actually part of the rent payment. Verify everything in the advertisement, or promised verbally, is spelled out in the lease before signing or paying a deposit. Once you’ve signed the lease, you are most likely bound to the apartment, as is.
Following this advice should help you avoid rental scams and find a home you love. Unfortunately, sometimes, even the most careful renter may become a victim of rental fraud. If you’ve experienced rental fraud, you can file a report with your local police department and contact your state consumer protection agency for assistance. Federal agencies usually can’t act on your behalf, for example, by helping return a fraudulent deposit, but they can use complaints reported here to identify patterns of abuse.