Tenant screening scams are everywhere. If you don’t believe that applicants will come to your table looking to scam their way into a home or apartment that they have no intention of treating reasonably, you haven’t been a landlord for very long. Here are a few common ways we’ve seen other landlords get taken in.
5 Scams That Trick Landlords Into Accepting Less-Than-Stellar Tenants
The False Credit Report
It can seem like a nice gesture — the tenant brings their application, a tidy little pile of supporting paperwork, and a copy of their credit report. You just saved yourself the credit report fee! Right? Hell no.
Here’s the deal: this is the era of technology. Any slacker with a $200 refurbished 2005 computer and a free afternoon can whip out a pirated copy of Photoshop and edit literally any document they have. If it gets a roof over their head, why wouldn’t they? After all, it only takes one edit and you can give the faked document to dozens or hundreds of landlords — it just takes one mistake (or a lazy landlord!) to get into a home knowing full well you can’t pay for it.
The Fabricated Proof of Residence and Employment
Did you know that there is a market for fake pay stubs and W-2s? It’s not even illegal to create and sell them to criminals intent on pulling tenant screening scams! Sure, the tenant risks being arrested if they use them, but one of the advantages of such fakery is that you never end up seeing their real name, address, or potentially even phone number, if they go so far as to buy a burner phone.
It’s up to you as the landlord to research these details — does that workplace even exist? When you attempt to call their previous landlord, ask for someone fictional. If they’re faking, they’ll generally tell you who they really are when asked if they’re a nonexistent business — but if you ask them, “Are you the landlord at Byron’s Apartments,” well, of course they’re going to say yes. They’re in on the scam, after all.
Cash Up Front for an Immediate Move-In
It can be extremely easy to say “yes” to someone who offers you six months’ rent up front for the opportunity to move in tomorrow — after all, if they have that kind of money, they’re going to keep having that kind of money, right? Yeah, right! Any attempt on the part of a tenant to convince you to skip the screening process should result in your immediate and instinctive slamming of the door in their face. It’s far too easy for a criminal, be they crook or con man, to come into a one-time pile of money and have zero plans for making more.
Oversized “Employer’s Checks”
This one is less common now than a decade ago, but it still happens often, particularly to businesses with a notable online presence. You’ll get an email from an applicant that seems entirely right, but they’ll note that they’re being moved by their employer, who will send you a check to cover all of the initial expenses. When you get the check, it will be over by some amount — sometimes there’s an extra zero on the end or sometimes it’s a reasonable-seeming “mistake,” like they doubled the security deposit. The person will ask you to cash it, use the portion you were asking for, and send the overage to someone.
Naturally, the check was never real, it will bounce, and you’ll be out whatever amount you sent away. You can avoid this by simply never cashing a check that isn’t for the correct amount or by cashing it and then waiting for the money to clear and show up in your account before you do anything with it. Of course, you may still have to deal with potential bounced check fees from your bank.
The Six Months’ Advance Sublet
This is a brutal scam because the tenant is the victim just as much as you are. You’ll be advertising a property, find a seemingly-perfect tenant, and get them moved in. The first month’s rent will come in on time, no problems — but the second or third month will be late. You’ll head over to knock on their door and encounter someone completely different living there. When you ask for the tenant by name, the person living there will have no idea what you’re talking about and explain that they already paid the first six months’ rent to the landlord, who is not you.
Essentially, you took in a scammer who turned around and advertised your property, filled the “vacancy” with a commitment of six months’ rent up front, and then vanished into the sunset, leaving you with a tenant you haven’t screened and who insists that they can’t afford to pay rent a second time. Again, rigorous examination of every detail of the application and supporting paperwork, expecting a scammer, is the only way to catch this before it begins.
In short, when it comes to avoiding tenant screening scams, be prepared to put in ALL the work, every tenant, every time.
Landlords: Have you ever encountered these scams? What would you add to the list?
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.