Catch Me If You Can... And I Bet You Can’t!

Fraudsters are more sophisticated than ever—staying up to date on compliance can help limit exposure.

3 minute read

It would be much simpler if fraud fell into a singular bucket. For instance, if fake paystubs were the only nefarious items property teams regularly encountered, things would be much easier to manage.  

Unfortunately, multifamily associates also grapple with altered social security cards, inflated bank statements, synthetic IDs, fake employment records, and more frequently than ever, fake assistance animal documentation. All have the capability to negatively impact the bottom line, but according to panelists at the 2023 Apartmentalize session “Catch Me If You Can . . . And I Bet You Can’t,” properties are now better equipped to combat the various types of fraud.  

“Of the more than 3 million financial documents that we’ve scanned over the past few years, we’ve discovered that one in eight is fake,” says Daniel Berlind, CEO of Snappt. “And fake financial documents are responsible for 25% of evictions. When you consider that the average eviction cost is about $7,500, it’s a huge issue.” 

An estimated 10 million fraudulent documents are submitted to the apartment industry annually, which equates to approximately 1,200 per hour. Berlind noted that advancements on Adobe make editing documents easier than ever before, which is why many altered documents appear genuine at first look.  

“Fraud is potentially responsible for rising rents, because it effects the bottom line,” says Pat Patterson, Director of Multifamily for PetScreening. “All costs incurred by a community factor into where the rates have to be set.” 

What can the industry do to combat it? Berlind recommends the “fight fire with fire” approach, imploring operators to counter with technology. While emerging tech platforms that concentrate on ID verification, income verification, rental-payment history, assistance animal verification and employment verification might not short-circuit all fraud attempts, they’ll limit a significant portion.  

Not all fraud is directly geared toward misrepresentation of identity or financial standing, however. It has extended to assistance animal requests, in which applicants often aim to pass off their pet as a service animal or emotional support animal (ESA). While there are many valid assistance animal requests, the illegitimate requests are an effort to circumvent the system. These applicants are aiming to escape pet fees and rent or work around a community’s restricted list.  

“We’ll see the same doctor letters over and over on these requests, which indicates that people are getting their information online rather than directly from their medical provider,” says Stephanie Thornberg, Vice President of Avenue5 Residential. “It’s something we’re going to have to address as it becomes more and more popular.” 

Thornberg recommends that operators closely study the HUD guidelines on assistance animals so that teams are well-versed on the questions they can ask and the additional nuances. Operators can also consider removing verification tasks from onsite teams by partnering with a service that can effectively handle them, she said. And whether handling onsite or outsourcing, teams should always treat the requests as valid until proven otherwise.  

“Always start from a place of ‘yes’ with accommodation animal requests,” Thornberg says. “It will save you a fair housing complaint, which can be something of a time suck and is so unnecessary.” 

Because of what it offers, the apartment sector will always be ripe for fraud attempts. That’s not even considering potential employee fraud, such as embezzlement, timecard manipulation or collusion with suppliers. But the industry is blessed with increasingly sophisticated resources to fight fire with fire and must continue to stop bad actors in their tracks.  

Paul Willis is a Content Director for LinnellTaylor Marketing.