15 Common Tenant Scams & How Landlords Can Avoid Them

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Tenant scams take advantage of unassuming landlords who fail to implement the right procedures for screening renters, writing contracts, and collecting payments. Although scams come in different forms, some of the most common are submitting false employment records, faking credit reports, forging checks and pay stubs, and hiding property damages. These scams cost landlords valuable time and risk their incomes and businesses.

To avoid these, we’ve exposed 15 tenant scams that should raise a red flag to landlords, along with tips on how to prevent falling for them.

1. Giving Fake Checks for Rent & Security

Tenants who provide written checks aren’t usually questioned about the validity of their payments. In particular, if a check was written from what looks like a reputable financial services company (e.g., Western Union) or a nationally known bank (e.g., Wells Fargo, Chase, or Bank of America), it doesn’t raise suspicions.

Tenants using fake checks scams will provide these checks for rent, security, and possibly a deposit to get access to the unit without the intention of ever paying. By the time the landlord cashes the check, they realize these funds are invalid and now have to deal with getting paid, evicting the current tenant, or realizing immediate damage was made to their property, like stolen appliances.

How to Avoid

The Federal Deposit Insurance Corporation (FDIC) is responsible for insuring bank deposits and overseeing financial institutions for safety and consumer protection. The FDIC and Better Business Bureau (BBB) have listed multiple ways to spot fake checks, so landlords know of any inconsistencies or suspicious elements:

• Look for items like watermarks, security threads, or color-changing ink. These high-security features usually cannot be duplicated on false checks.
• Consider where the check was mailed from if not presented in person by prospective tenants. If checks were not directly mailed from a valid bank, make sure the checks clear before allowing access to the property.
• Landlords should also be aware of the differences between cashier’s checks and money orders. Money orders are extremely hard to trace funds, whereas cashier’s checks allow law enforcement to trace criminals much easier.
• Make sure the check doesn’t feel like it’s been printed on flimsy or suspicious material.
• The check number listed on the upper right of the check should match the check number following the account number at the bottom of the check.

2. Writing a Check Larger Than the Move-in Amount

According to the Financial Crimes Enforcement Network (FCEN), banks reported an 84% increase in check fraud from 2021 to 2022. JP Morgan’s 2022 Payments Fraud and Control Report also found that 66% of financial professionals reported check fraud activity in both 2020 and 2021. Knowing these statistics should raise a red flag for landlords for tenants who write checks, especially in a larger amount than necessary.

When a tenant wants to give you more money upfront than you asked for, we’re wired to think it’s a good sign. Rental scams targeting landlords, like rent overpayment, should be a huge red flag. These tenant fraudsters will write you a check for more than the amount you need for rent, security, deposit, etc., then ask you to refund the balance.

The Federal Trade Commission says banks are required by law to make deposited funds available within two days. Many landlords may see the available funds and assume the checks have cleared. However, checks can still bounce before you can figure out you’ve already sent funds back to the tenant and are stuck with the money owed to the bank.

How to Avoid

When landlords receive a check for more than the required amount, they should promptly return it to the tenant instead of depositing it into their bank account. Landlords can also include policies in the lease to address rent overpayment. Any excess funds can be applied to the remaining months of the lease, or the overpayment can be returned at the lease’s end. Another way to ensure security with checks is to cash them before providing tenants with possession of the property.

3. False Employment Records

False employer information on rental applications is a common fake tenant scam that can cause problems for landlords. According to a study by Snappt, 66% of property managers reported receiving fraudulent applications. Tenants often provide fake employment history and ask friends or family to pose as employers to verify false employment. This tactic is used when tenants lack stable income sources, raising concerns for landlords about their ability to pay rent.

How to Avoid

When making rental application decisions, don’t solely rely on the information given by the tenant. Take the initiative to call the employer yourself for verification, even if they can only provide limited details due to policies.

Request additional documents like pay stubs, employment letters, and bank statements to assess the tenant’s suitability. Compare all information, including employer names, logos, and salaries, for consistency. You can also perform a quick Google search or check LinkedIn to validate employment history.

4. Providing a Fake Credit Report

Fair Isaac Corporation (FICO) lists the average credit score in 2023 as 716, which is considered in a good range based on a scale of 300 to 850. Although credit scores can indicate financial responsibility, landlords should take a deep dive into payment history to understand a tenant’s track record in making on-time payments to their liabilities.

Common tenant scams can also occur from tenants providing their own fake credit reports. Tenants who have been denied from multiple units will come prepared with their own report in an attempt to help you save a few bucks on running the report.

However, the information listed on the credit report may be changed to show a more favorable report. An oversight made by landlords screening tenants for their properties happens when they trust the credit report provided to them quickly and base their decision on application approval solely on credit score alone.

How to Avoid

Landlords should always conduct their credit and background checks. They can run credit manually or utilize property management platforms. This enables them to pull credit, background, and eviction reports, providing a better understanding of prospective tenants.

5. Renting on Behalf of the Owner

Subleasing a property to a new third party is not illegal as long as it’s permitted within the terms of your lease. The rental scam occurs when a tenant subleases their property to a third party without notifying the landlord. The tenant will collect months of payment upfront from the third party and never transfer those funds to the landlord. By the time a landlord attempts to collect the payments, there is a new tenant in the property who’s already paid their rent to the leaseholder.

How to Avoid

Make it extremely clear with your tenants at lease signing that subleasing is not allowed, and legal action may take place if they breach the agreement. Landlords can also add a “no subletting” clause within the lease that prohibits subletting without the landlord’s consent.

In addition, landlords have the right to inspect their properties. Schedule regular visits or provide short notice before inspecting the property if they suspect non-primary residents are living there. The tenant’s response or lack thereof may indicate whether illegal subletting is taking place. Check the lease for the required notice period before conducting a visit.

Address late rent payments promptly to prevent any delay in detecting potential renter scams. Landlords can monitor late rental payments by using online rent payment services, some of which offer notifications on the rent deposits. Additionally, these services may report rent payments to credit bureaus, ensuring that late or missed payments are reflected on the credit report for future reference by other landlords.

6. Fake Pay Stubs

Providing pay stubs during the application process is a way for landlords to verify tenants’ proof of income and determine if they can afford the rent. Tenants scamming landlords with fake pay stubs usually fail to meet standard rental income requirements, suggesting they are likely less financially stable than they appear.

These prospective tenants attempt to get their leasing applications approved by providing fraudulent pay stubs. Creating fake pay stubs is easily accessible to tenants online, as they can find affordable options with minimal turnaround time.

How to Avoid

Landlords should examine all pay stubs for any discrepancies in numbers, formatting, and quality. Telltale signs of a fake pay stub include income rounded to a whole number and a lack of professional details. Professional details include the employer’s name, address, and company logo.

Landlords can call the applicant’s employer to verify employment. Keep in mind that some employers are not allowed to provide salary information, but will verify if the applicant is a current employee. If you are uncertain if a pay stub is valid, you can always ask for bank statements to match the check deposits or a W2 for additional proof of income.

7. Tenants Doing Things to Reset the Eviction Process

Over 2 million evictions have occurred since March 2020 in Connecticut, Delaware, Indiana, Minnesota, Missouri, and New Mexico. A frequent tenant eviction scam that occurs during the eviction process is resetting the eviction timeline. Tenants can make a late or partial payment of a significantly smaller amount than what is owed, and if the landlord accepts it, it can reset the eviction clock.

Landlords will also need to restart the eviction process if the tenant requests additional time in the unit and you accept the request. Additional time can be a few days or even as little as a few hours.

Landlords are able to give tenants an eviction notice with or without cause. Usually, an eviction notice without cause would be for unit renovations and improvements to increase rent, but landlords would need to provide adequate notice to the tenant. Eviction notices with cause are usually due to lack of rent payment or misbehavior. Evictions, on average, can take a few weeks to a few years, depending on the case.

How to Avoid

Landlords should take all precautions to avoid a long eviction process and the cost of eviction. Sometimes landlords may even decide to procure cash for keys agreement with the tenant to avoid the eviction process altogether.

8. Stealing Your Listing

Unfortunately, with the increase in online lead generation and advertising efforts for vacant properties being marketed digitally, there has been an increase in stolen listings by tenant fraudsters. These fraudsters will copy your property photos and listing information, and advertise it on a site for a significantly lower monthly rent to attract unsuspecting renters.