November 13, 2018

3 Tips to Help You Avoid a Rental Scam This Fall

International Fraud Awareness Week (November 11-17, 2018) is a good reminder that criminals are always on the lookout for new victims. In some cases they're targeting renters, particularly those unfamiliar with the rental process, new to an area, or hoping to find a good deal.

As the rental market grows, so does the potential for rental fraud. An estimated 5.2 million renters have lost money to rental fraud, according to Apartment List, an apartment rental site.

Young Renters Beware

Watch our video to help you spot phony online rental ads and avoid becoming a fraud statistic.

Rental fraud may be more prevalent than you might think. Apartment List surveyed 1,000 renters in June 2018 and found 43.1% had encountered a rental listing they suspected was fraudulent, and 6.4% had lost money to fraud. And not just small amounts: One in three victims had lost $1,000 or more, most often from paying a security deposit or rent on a fraudulent property.

Apartment List also found that younger renters, ages 18 to 29, were the most likely to be victimized. While tech-savvy, these renters were unfamiliar with how to research a rental online — what questions to ask and what constitutes a red flag. They might also be relocating to a new area for a job, internship, or graduate school, and give into pressure to sign a lease and send money before viewing the rental, especially in hot rental markets where rentals are listed-and-leased in hours.

How It Works

Rental fraud crooks often will pose as the property owner or manager. They'll place phony ads to find their victims, and may offer certain enticements, such as not requiring a credit or background check or rent that's below the market's norm. In some cases, the photos and descriptions they use are real, but the contact information has been altered.

When you contact them, they may ask for money -- for the application fee, security deposit, or first month's rent. Don't bite! Once you send the money, they'll be gone in the wind, leaving you with a lighter wallet and nowhere to live. Plus, if you provided personal information, such as your bank account information and Social Security number, you could become a victim of identity theft or other types of consumer fraud.

To protect yourself, learn all you can about the rental process and watch for these red flags:

  1. You're asked to wire money.
    The Federal Trade Commission (FTC) calls this the surest sign of a scam. "There's never a good reason to wire money to pay a security deposit, application fee, first month's rent, or vacation rental fee," they warn. "That's true even if they send you a contract first. Wiring money is the same as sending cash — once you send it, you have no way to get it back."
  2. You don't know who you're dealing with.
    You should meet with the rental contact and check their photo ID, to be sure they're actually the owner or property manager. Depending on where you live, you can search county tax records online or visit the assessor's office. If you're renting long-distance, ask someone to visit the property for you to confirm the person's identity and that the property is a legitimate rental.
  3. You're pressured into making a fast decision.
    Scammers create elaborate (and often touching) backstories about why they need to close deals immediately. It may be military deployment, or they're leaving town as part of a church group to help overseas disaster victims. They may offer to put you in touch with a friend or relative to deliver the keys once your payment has cleared. Beware! If you're being pressured to make a fast decision, keep looking, say the experts.

The odds are slim that you'll be victimized, but it never hurts to be aware of the danger. You can also visit My Home by Freddie MacSM for more information about renting, buying or owning a home.