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Home · Property Management · Tenant Screening : Tenant Background Checks: 4 Crucial Tips for Detecting Fraud

Identity photoFor many landlords, fraud is a four-letter word. That is because they know it spells getting ripped off with precious little recourse to collect the bad tenant debt.

Tenant background checks can help curb the significant number of rental applications that are completely fabricated, from the applicant’s name and social security number to job, bank and personal references.

Many delinquent tenants are better at writing fiction than holding down a job!

Learn to recognize some common-and some not so common-signs of fraud:

  • The bolder forms of fraud involve stolen or fake ID and often are used by professional con artists. Always meet face-to-face with prospects to improve the odds you’ll notice discrepancies – for example, a noticeable difference in appearance from the ID. People reveal themselves through common conversation. If they claim to be 50 years old, but don’t remember Elvis, that is a red flag!
  • Do a full tenant background check, so you can cross-reference many reports. Is their bank account older than they are? Are there gaps in their rental history? Do they have a blank credit report? The false information is likely blended with some truth. Often, if you check out multiple sources, including references, the inconsistencies will be glaring.
  • An applicant may reveal an attitude of fraud. Look for transposed numbers or omitted information. Was it an honest mistake or an attempt to defraud the property owner? Study how the prospect responds when you ask. Is he nervous? Evasive? Arrogant?
  • Take a tip from law enforcement – every suspect they interview was bringing gifts to the orphanage or helping a widow cross the street. But ask questions out of chronological order, and inconsistencies emerge. As Mark Twain once said, if truth is stranger than fiction, it’s because fiction has to make sense. When a person has a chance to think about their story, it often sounds too contrived.

Other members want to hear your advice on tenant screening and tenant background checks! Please share your insights by leaving your comment below.

Thorough tenant screening is only half the battle. You also need to know how to maintain current and complete tenant files. Learn how in How-To Tips for Tenant File Maintenance.

Collecting references is only valuable if you check them. See Tips for Checking Personal References.

Need help drafting a Lease Agreement? See our four-part series How to Draft a Solid Lease Agreement.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.

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  • On my application, I ask tenants to provide their current or previous landlord name and phone number. THEN, I independently look up the owner of that property and see if the name matches, then use the phone book or other searches to secure the landlords actual phone number. I have run in to many applicants who put a friend’s phone number down to act as their landlord and I have caught many in their lies! My best tip on applications is to assume everything is false until proven true!!

  • AFTER READING LISA’S NOTATION ABOUT POTENTIAL TENANTS USING FRIENDS AS PAST LANDLORDS IS QUIT COMMON. I RECENTLY WAS LIED TO BY A COUPLE BEFORE THEY FILLED OUT THE RENTAL APPLICATION. THEY TOLD ME THAT THEY PAID THEIR RENT AND ALL THEIR UTILITY BILLS BY PERSONAL CHECK BEFORE THE FIFTH OF EACH MONTH. AFTER THEY FINISHED THEIR WRITTEN APPLICATION I AS THEM TO BRING IN THEIR LAST LEASE, AND THEIR LAST CANCELLED CHECKS FOR THEIR UTILITY BILLS, WHICH WERE PAID BEFORE THE FIFTH OF EVERY MONTH. NEEDLESS TO SAY I NEVER HEARD FROM THEM AGAIN.

  • AFTER READING LISA’S NOTATION ABOUT POTENTIAL TENANTS USING FRIENDS AS PAST LANDLORDS IS QUIT COMMON. I RECENTLY WAS LIED TO BY A COUPLE BEFORE THEY FILLED OUT THE RENTAL APPLICATION. THEY TOLD ME THAT THEY PAID THEIR RENT AND ALL THEIR UTILITY BILLS BY PERSONAL CHECK BEFORE THE FIFTH OF EACH MONTH. AFTER THEY FINISHED THEIR WRITTEN APPLICATION I ASKED THEM TO BRING IN THEIR LAST LEASE, AND THEIR LAST CANCELLED CHECKS FOR THEIR UTILITY BILLS, WHICH WERE PAID BEFORE THE FIFTH OF EVERY MONTH. NEEDLESS TO SAY I NEVER HEARD FROM THEM AGAIN.

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