Lettings Fraud - what do I need to know?
AML Services Manager
Letting or rental fraud can take many different forms. It could include a tenant who does not intend to pay rent, inflated or falsified income and illegal subletting. A tenant may need to commit application fraud to succeed with any lettings fraud.
What is application fraud?
Application fraud can be an issue across many different sectors, with the impact very much dictated by the industry and the potential victims. It occurs when an individual applies for an account, policy or service using non-genuine information, which will impact the outcome. Examples of application fraud could be applications for rental properties, mortgages, applying for a job, or insurance claims.
The false information could include employment details, income, addresses, name and date of birth. It could also encompass false documents such as pay slips, bank statements, passports or driving licences.
Focusing on the letting process and what form application fraud could take, in this scenario, this is when someone lies on their application to a property manager, letting an agent or landlord secure the rental property.
Given the advancements in technology, the easy accessibility of fraudulent documents available online at a nominal fee and even the availability of editing software, some are free on the internet. Application fraud and, notably, lettings application fraud is an issue.
We are currently in the midst of what is a perfect storm. The economic climate and the cost of living crisis are leading to severe hardship in society. Driving more people into the rental market and leading more individuals into situations previously they would not have considered, for example, committing fraud.
Fraudsters are getting more sophisticated by the day. Available online options make it easy for people to obtain fake and forged documents. Often on face value, they look nearly, if not identical, to genuine identity documents, such as passports, driving licences and even bank statements. We all have to be extra vigilant when screening prospective tenants. Human screening and traditional methods no longer afford us suitable protection. We have to question if they are enough. If you genuinely want to keep your firm, landlords and even genuine tenants safe, living and working within a world that does not benefit fraudsters, then we have to consider what mitigating steps we can implement.
How can you fight back against the baddies?
Do not rely solely on human defences; consider what technology controls can complement your process.
Meet the tenants in person or use high-quality facial recognition technology software.
Beware of the red flags.
Train your team to know the risks and how to identify them.
Understand the tenant's source of funds and source of wealth.
Consider the tenant's affordability.
What technology can you implement within your policies, controls and procedures to mitigate the risks?
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