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September 23, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Rental fraud cheats 5.2 million U.S. renters a year, survey estimates

You can add rental fraud to the list of online marketing schemes to guard against as you navigate modern life in the era of the con.

According to a June survey by Apartment List, an online apartment rental service, renters lose millions of dollars a year to phony or dishonest property managers and landlords.

“An estimated 5.2 million U.S. renters have lost money on a rental scam,” the organization calculated, “and far more have encountered scam listings or contacted fraudulent properties during an apartment hunt.”

The New York City region ranked among the 10 worst metropolitan areas for the chances of encountering a fraudulent rental listing and for the likelihood of losing money.

Nationally, 43 percent of the surveyed renters thought someone had tried to trick them. Most of them did not fall for the frauds, but 6.4 percent of them did fork over money for bogus rentals.

The fraudsters usually claim to be property managers or landlords. Sometimes, an actual manager or landlord is the trickster.

The goal is to collect an application fee, security deposit or monthly rent before the renter realizes that he or she has been had.

Five schemes are commonly used:

In the bait-and-switch, the listed property is different than the available property.

Phantom rentals are places that don’t even exist or are not rental properties. They are listed at low prices in order to lure prospective renters.

Hijacked ads use real rental properties but alter the contact information.

The missing amenities tactic also uses real properties but lists phony features – in-unit laundry, a balcony, a gym, a second bedroom – to justify higher rent.

The already leased dodge cons renters into paying an application fee or security deposit on a property that has already been rented.

While most renters figure out that something is amiss, the survey found that millennials are more prone to the deceptions. They are more tech savvy with online marketplaces, but less scam savvy than older renters.

Young renters are often summer interns, graduate students or job seekers who are lining up places to live in unfamiliar cities. They agree to lease properties sight unseen.

The money lost on fraudulent rentals ranges typically from less than $100 for an application or credit check to thousands of dollars for a deposit or first month’s rent.

The New York City region ranked eighth worst for the chance of encountering a fraudulent listing, at 37.2 percent, and seventh worst for the likelihood of actually losing money, at 7.1 percent.

Besides New York City, among the 30 metropolitan areas, only Denver ranked among the worst on both measures.

Apartment List surveyed 1,126 renters nationally to establish the prevalence of dishonest rental schemes. It surveyed another 50 to 54 renters per city in the 30 largest metropolitan areas to calculate local fraud rates.

If you are looking for a safe place to rent, try Minneapolis, Pittsburgh or Kansas City. They ranked among the best as places where you are less likely to encounter fraudulent rentals and less likely to lose money.