Rampant, Increasing Fraud Impacting Rental Housing Costs

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Fraud impacting rental housing costs throughout the country is on the rise and includes incidences of fraudulent rental applications, financial and identity fraud, and is often fueled by social media, the National Multifamily Housing Council (NMHC) says in a new survey.

“Driven in part by social media platforms such as TikTok and Instagram, the rise in false rental housing applications is exacerbating rental costs, fueling the housing affordability challenges facing communities across the country and undermining the credibility of eviction data. These fraudulent incidents consist of a wide range of wrongdoing, including criminal behavior,” the NMHC says in a release about the survey.

The NMHC Pulse Survey on Operational Impact of Rental Application Fraud and Bad Debt was done from November 5, 2023 to January 9, 2024 of NMHC members and National Apartment Association members representing 75 leading apartment owners, developers and managers.

Fraud impacting rental housing costs highlights of the survey:

• 84.3% of respondents have seen applicants falsifying or fabricating pay stubs, employment references or other income documentation;
• 80.0% observed prospective renters misrepresenting information on applications;
• 70.0% reported identity theft, fraudulent ID documents or use of another individual’s personal information;
• 67.1% experienced unauthorized cohabitants, illegal subletting or other actions to evade application or the leasing process; and
• 62.9% of respondents reported the use of fraudulent checks or other payment methods.

Sixty seven percent of those who experienced an increase in fraudulent applications and payments said that this varied by jurisdiction, and many (46.9%) called out Atlanta specifically as a jurisdiction where increases in fraud were most concentrated.

“There has been anecdotal evidence of the rise in fraudulent activity over recent years, but now we have clear evidence of the staggering impact of these crimes on the rental housing market,” said NMHC President Sharon Wilson Géno said in the release.

“While most renters are honest, those who are not are causing the cost of rental housing to increase for everyone. Additional delays in many jurisdictions in the lease enforcement process, even when there is clear fraud, incentivizes bad actors and means that this illegal behavior costs responsible renters even more. We call on lawmakers and courts to take action that will address this problem,” she said.

Source: Rental Housing Journal