There’s no denying that scams exist in the rental market. There are countless horror stories of renters falling victim to con artists posing as legitimate landlords. In some places, it seems the problem is only getting worse. 

But it’s not only tenants who are being taken advantage of—landlords are often the target as well. If you don’t know how to spot a rental scam, you could wind up with a tenant who brings you nothing but trouble and financial hardship. In this guide, we’ll examine five common rental scams that impact landlords and provide tips for avoiding them.

1. Fake credit reports

Reviewing a potential tenant’s credit report is a great way to determine if they can afford your rent. However, not every report you come across is genuine—some could be complete fakes.

The scam works like this: A tenant offers to provide a copy of their credit report personally, insisting it will save you time and money. However, instead of obtaining the document from a legitimate credit reporting agency, such as Equifax or TransUnion, they create one from scratch. 

Creating a phony credit report isn’t that difficult. Sometimes, all it takes is finding images of a sample credit report online and assembling them into a fake report using basic software, such as Google Docs and Acrobat DC.

How to protect yourself

Knowing the telltale signs of a fake credit report can help you avoid being conned by a dishonest tenant. While identifying a forgery can be challenging, most contain glaring inconsistencies and errors that make them stand out. Learn more about how to spot phony credit reports.

However, despite your best efforts, it’s still possible to mistake a fake report for one that’s authentic. That’s why you should never accept a credit history directly from a tenant. Instead, obtain the credit details you need from a third-party source, such as SingleKey’s Tenant Report. That way, you can rest assured that the information you’re looking at is accurate, reliable, and up-to-date.

2. False employment history

Tenants may exaggerate or misrepresent their employment situation to improve their chances of getting approved for a lease. For example, they may lie about their employment history on their application, misleading you into thinking they have a steady job when they don’t. They may even overstate their earnings or have a friend pose as their employer so they can provide you with a fake employment reference.

How to protect yourself

The only way to determine if an applicant is honest about their employment situation is to verify that they indeed hold the job they claim to have. Here’s how to do that

Step 1: Obtain consent from the applicant to confirm their employment history. On your rental application, disclose that by signing the document, the tenant consents to an employment background check. You can also mention this fact to the tenant during your pre-screening interview. 

Step 2: Ask for proof of earnings. Request that the tenant provide you with a copy of a few months’ pay stubs. That way, you can verify if their monthly earnings match what they’ve listed on their rental application. 

Step 3: Find the employer’s contact details. Search online (company website, social media profiles, etc.) to find the tenant’s employer and obtain their phone number and email address.

Step 4: Contact the employer to verify the tenant’s employment status. Reach out to the tenant’s employer to confirm the details provided by the tenant on their rental application, such as their start date at the company and monthly earnings.

3. Stolen rental listings

Sometimes, the culprit behind a rental scam is not the tenant but another individual posing as a landlord, looking to exploit renters. That’s the case with stolen rental listings.

In a rental listing scam, the fraudster replicates your rental ad, advertising your property as if they own it. They copy your photos and descriptions to create a fake listing on a rental platform. Then, they modify the ad by crafting an enticing offer to lure in unsuspecting renters, usually by offering an abnormally low rent price.

Once inquiries begin pouring in about the property, the fraudster urges renters to make a deposit to secure tenancy amid the “high demand.” However, once the duped individual sends the money, the fake landlord ceases all communication and disappears.

How to protect yourself

Do the following to help prevent con artists from hijacking your rental listing and tricking renters into parting with their money:

Search for your rental listing. Rental fraudsters can be pretty lazy—some will copy your rental ad word for word rather than creating their own. Luckily, that makes it easy to find online. To check if someone has copied your ad, type a distinct phrase that you used in the content in Google’s search bar and put it in quotes. This condition narrows the search results to web pages that contain the exact phrase.

Watermark your photos. A watermark is a transparent image, logo, or text placed over a photo to identify it as your own. It’s conspicuous and difficult to remove, which may deter thieves from stealing the images and reposting them on fake ads. Just ensure the watermark is something only you would know, such as your phone number. That way, if renters call to inquire about your “astonishingly low rent price,” you’ll know something’s wrong.

Set up a Google Alert. Consider setting up a Google Alert to monitor online mentions of your property’s address. If it appears on a web page, you’ll receive a notification, which you can promptly investigate.    

4. Illegal subletting of your rental property (both long and short-term leases)

There’s nothing wrong or illegal about a tenant subletting a rental unit to a third party. However, in most jurisdictions, they can legally do so only with the landlord’s permission.

Still, some tenants will ignore the law and sublet your property without your knowledge or consent. They will collect rent from the secondary occupant but never pay what they owe you under the main lease. Once you attempt to recover the past-due rent, the original tenant disappears. Or, they may have left a long time ago.

Besides the possibility of lost rent, illegal subletting increases the risk of property damage and legal disputes since you never screened the subtenant. Evicting them can also be messy and tedious, depending on your region’s squatting regulations. For example, in New York, an individual who occupies a property assumes the status of a legal tenant after only 30 days.

How to protect yourself

If you prohibit subletting in your rental agreement, include a clause in the lease that forbids the practice. Inform your tenant that violating the policy can result in the termination of the lease.

Alternatively, state that subletting is allowed only with your explicit permission. That way, you have more control over who can stay in your rental and for how long. When creating your subletting policy, consider the following:

• Who is responsible for screening subtenants? You or your tenant?
• Will approval be granted on a case-by-case basis, or will there be strict criteria that every applicant must meet?
• What are the rules for overnight visitors?

As with stolen rental listings, you can also create an alert to receive emails when your rental property’s address appears in Google Search results. If it does, it could be that your tenant is advertising your rental for subletting. You can also sign up for a service like SubletAlert, which notifies you when a tenant sublets your property on Airbnb and similar platforms.

Regular inspections are another effective way to prevent or detect illegal subletting in your rental property. You can even do surprise visits, provided you give your tenant proper notice before entering.

5. Rent dodging

Landlords cite non-payment of rent or late rent payments as one of their greatest fears in managing a rental property. Usually, this occurs because the tenant experiences a financial setback that causes them to fall behind on rent, such as job loss, severe illness, or divorce. However, some enter into a lease intending never to pay rent, even if they have the financial means.

Rent dodging scams are difficult to foresee, as the tenant initially appears cooperative, reliable, and trustworthy. They may pay the first month’s rent and security deposit without trouble and have no history of prior evictions. However, after moving it, they abruptly stop sending money on the 1st of the month. When you realize the trouble that you’re in, you may already be out several months of rent and mounting expenses. 

How to protect yourself

A rigorous tenant screening process is the first line of defense against a rent-dodging scam. However, it’s not an airtight solution, as there’s no way to predict how a tenant will behave in the future. If your tenant suddenly stops paying rent, don’t procrastinate. Take action now, or you’ll find yourself with thousands or tens of thousands of dollars in past-due rent.

To protect yourself, consider enrolling in a program like SingleKey’s Rent Guarantee, which offers financial compensation for lost rent if your tenant stops paying. You’ll have peace of mind knowing you have a backup plan to help you stay afloat while searching for a replacement tenant.

What to do if you’ve been scammed

If you’ve fallen victim to a rental scammer, take action immediately. The sooner you do, the more likely the fraudster will get caught and charged. Here’s what you can do if you suspect fraud has taken place:

Contact local authorities. Get in touch with law enforcement in the community where your rental is located. Provided there’s sufficient evidence, the police will launch an investigation to find the culprit. If successful, you may be able to recover the money you lost due to the scam.

Contact the rental listing website. If a fraudster has created a fake ad using your listing, send a request to the rental platform to take it down. 

Report to the Federal Trade Commission (FTC). The FTC is a U.S. federal agency that protects consumers from illegal, deceptive, and unfair business practices. You can report the incident on the FTC’s website at reportfraud.ftc.gov.

Report to Openroom. Openroom is an online platform that collects court orders, tribunal decisions, and crowdsourced information related to disputes between landlords and tenants. Adding your case will help other landlords make informed decisions about renters before signing a lease agreement.

Report to the Canadian Anti-Fraud Centre (CAFC). The CAFC is a Canadian government agency responsible for gathering information and complaints about illegal and unethical business practices. You can report the scam on the organization’s website or by calling their phone number.

File a complaint through the Internet Crime Complaint Center (IC3). The IC3 is a government agency that assists local authorities and the FBI in solving online crimes.

Our final thoughts

Rental scams are an unfortunate reality in the rental industry. If you’ve been in this business long enough, you can expect to encounter them sooner or later. Unfortunately, you can’t predict with 100% accuracy how a tenant will behave once they move in, which can be frustrating and demoralizing. However, understanding how rental scams operate and applying the right tools and techniques to combat them can help you avoid becoming a victim.

To learn more about protecting yourself as a landlord from rental scams, check out our webinar on fraud prevention.