Common Tenant Frauds
Identity theft is true name fraud. Fraud occurs when an individual’s personal information is used without their knowledge by another individual to commit a criminal act. An applicant may use bits and pieces of the identity theft victim’s personal information, such as the victim’s name, date of birth, or Social Security number, as his own information on the rental application. Unless the landlord discovers red flag issues or obvious discrepancies, the applicant may be approved for tenancy based upon the qualifications of the identity theft victim. When the fraudulent tenant defaults on his lease, the landlord will discover that his tenant was never who the landlord thought he was.
Manufactured identities are another type of tenant fraud. A fictitious identity is created through the use of digital fraud. If a landlord installs this tenant, the person using the false identity now has the means to obtain credit or commit other types of fraud. The fraud may not be discovered until the tenancy is well along and may only be discovered if there is a material default of the lease. Once again the landlord will discover that his tenant was never who the landlord thought he was.
The use of online rental applications may contribute to tenant fraud. An online application provides a level of anonymity that can create problems for a landlord since the landlord has no knowledge of how the application was completed.
When accepting applications, landlords must ask for proof of identity. Industry standard is to require two forms of identification with one document containing a photograph of the individual. Most landlords consider a state issued driver’s license to be a reliable identification document. Because the document is official looking, many landlords take only a cursory glance, assume the document is valid and accept it without question. However fraudulent documents can easily be produced by applicants and tenants whose intention is to create rental fraud. Any document used in support of a rental application should be independently verified at the appropriate source or level of agency that purportedly issued the document.
A state issued driver’s license provides a great deal of personal information that could be used to further verify applicant information. The license generally contains the legal name of the driver, a photo identification, date of birth, and descriptive personal information of the driver’s sex, height, weight, eye color, hair color, or restrictions such as glasses. A landlord should certainly check that the appearance of the applicant is reasonably similar to the photo on the license and that each item of physical information shown on the license seems reasonable compared to the person in front of the landlord. The signature on the license should be similar in appearance to the handwriting and signature of the applicant on the application form.