As the COVID-19 pandemic pushed apartment operators into a digital-first and socially distanced environment, a new fraud analysis from TransUnion reveals that indicators of potentially fraudulent activity among rental housing applicants are on the rise. Since the start of the pandemic, the organization reported that it witnessed the percentage of detected fraud triggers increase nearly 30 percent from March 2020 through August 2020.
Fraud triggers, which TransUnion defines as applicant statuses with failed authentication and/or identified as high risk, reached a high of 15.2 percent in August 2020, compared to 10.3 percent during August 2019.
“Fraud continues to be an increasingly concerning issue in the multifamily industry for the last several years and the COVID-19 pandemic driven shift to virtual leasing has pushed this concern to the forefront for property managers,” said Maitri Johnson, Vice President of TransUnion’s tenant and employment business, in a release. “It is imperative that management companies take the necessary precautions and protect their business against the economic impacts brought on by the current environment, as well as the increased propensity for fraud that may not be easily evident today.”
The organization also released survey results of 82 multifamily executives, conducted in September 2020, to better understand the effect fraud has on rental housing and how these executives are managing fraud-related challenges.
According to the release, the survey found that since the pandemic began, the frequency of fraud incidents have increased for 48% of respondents, with another 26% reporting up to 100 instances of fraud in their portfolio during the past year. More concerning for rental housing companies, is that while many companies were able to pinpoint fraudelent application activity prior to move-in, 41% of respondents said they did not identify the fraud until after move-in, resulting in a negative impact to the organization’s bottom line.
“As fraud evolves and fraudsters become more sophisticated in their techniques, fraud prevention strategies and solutions have become top of mind for industry insiders,” Johnson said in the release. “As a result of the COVID-19 pandemic, 22% of respondents noted an identity verification or fraud solution has been implemented to help mitigate this growing issue.”