Red flags for fraudulent activity among rental housing applicants are skyrocketing amid the coronavirus pandemic, according to a new analysis from TransUnion.
“Since the start of the pandemic, the percentage of fraud triggers detected through TransUnion’s multi-layered rental housing specific fraud solution, ResidentID, increased nearly 30% from the period of March 2020 to August 2020,” the credit rating agency said in a statement emailed to MPA.
Fraud triggers – identified as applicant statuses with failed authentication and/or identified as high risk, reached a high of 15.2% in August, compared to just 10.3% over the same period in 2019, according to the analysis.
“Over the course of the pandemic, this rise in fraud triggers has not only left an impact on the rental industry, it has also placed multifamily executives on high alert for fraudsters,” TransUnion said.
“Fraud continues to be an increasingly concerning issue in the multifamily industry for the last several years, and the COVID-19 pandemic-driven shift to virtual leasing has pushed this concern to the forefront for property managers,” said Maitri Johnson, vice president of TransUnion’s tenant and employment business. “It is imperative that management companies take the necessary precautions and protect their business against the economic impacts brought on by the current environment, as well as the increased propensity for fraud that may not be easily evident today.”
TransUnion recently surveyed 82 multifamily executives to find out how they were managing fraud concerns in the current environment. The survey found since the pandemic began, 48% of respondents said that fraud incidents had increased. Another 26% have experienced up to 100 instances of fraud in their portfolios in the past year.
“While many of these organizations were able to flag fraudsters prior to move-in, 41% of respondents stated they didn’t identify the fraud until after the applicant moved in – resulting in a negative impact to the organization’s bottom line,” TransUnion said in an email to MPA.
The study also found that two out of three multifamily execs were worried about future fraud growth within their communities.
“As fraud evolves and fraudsters become more sophisticated in their techniques, fraud prevention strategies and solutions have become top-of-mind for industry insiders,” Johnson said. “As a result of the COVID-19 pandemic, 22% of respondents noted an identity-verification or fraud solution has been implemented to help mitigate this growing issue.”