According to a site that caters to landlords and property managers, in October 2022, “federal agents 35-year arrested Latoya Williams at her home in New York City and charged her with a crime that’s likely to keep any apartment operator up at night.” As reported by the New York Times, and as recounted in Multifamily Dive,
Since at least 2020, Williams ran a scam where she used fake driver’s licenses, bank statements and tax documents to rent luxury apartments around New York City, according to The New York Times. She then leased those apartments to gang members who may not have been able to pass background checks on their own, according to prosecutors.
Eighty-five percent of apartment property managers feel consumers are becoming more comfortable committing application fraud. This is according to the 2022 State of Apartment Tenant Screening Survey from Snappt, a Los Angeles-based company that can put U.S. financial documents through a fraud detection platform.
Snappt estimates that 11 million fraudulent rental applications were submitted last year in the U.S. The company also found that one in eight financial documents had been fraudulently altered out of the more than 1 million it scanned. “Application fraud is more prevalent than you would think, especially in a world of online applications,” Daniel Berlind, CEO of Snappt, said in a press release.
Multifamily Dive noted that “between 2019 and 2021, reports of fraud, identity theft and other deceptions spiked 67% in the U.S., according to the Federal Trade Commission. In a 2020 analysis, LexisNexis found more than 30,000 fraud rings involved in forgery, filing false claims, identity theft, identity manipulation and fake bank checks.” During the COVID-19 pandemic, Snappt CEO Daniel Berlind said, “we saw that fraud literally doubled…”
Multifamily Dive reported that “[t]he tools to commit fraud also became more prevalent. Snappt estimates that 11 million fraudulent rental applications were submitted last year in the U.S. Out of about 40,000 and 50,000 applicants it reviews nationwide, about 10% are falsifying their documents, according to Berlind.” Advances in technology make document fraud much harder to detect to the naked eye.
The cities with the highest instances of rental application fraud are Atlanta (18%), Houston (16%), Dallas/Ft. Worth (13%), Charlotte (12%), Phoenix (11%), Los Angeles (11%), Tampa/St. Pete, Miami, and St. Louis all at 10%, and the Twin Cities at 9%.
Fraud is committed in many ways. Sometimes, “fraudsters are using a real person’s identity to get into an apartment. In others, they may change one digit in their social security number to fake their identification,” wrote Multifamily Dive. Pay stubs are much more easily doctored than bank statements, which may be why Snappt found that 15.6% of pay stubs submitted for rental housing applications were fraudulent, while under 5% of bank statements were doctored.
Leslie Shaver, Application fraud on the rise, Multifamily Dive, Nov. 1, 2022.
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More