Catch subletting schemes before the lease is signed
Rental Fraud Evolves as Subletting Schemes Challenge Property Managers
Rental fraud is no longer a distant threat—it’s a daily risk that property managers and owners must navigate with increasing vigilance. While many in the multifamily housing industry have responded with tighter vetting procedures like ID and background checks, a quieter, more elusive danger often slips through the cracks: subletting fraud.
This form of deception can wreak just as much financial havoc as rental fraud and is often harder to detect. It’s subtle, layered, and, if ignored, can drain resources, damage reputations, and leave communities vulnerable.
Michele Varrecchia, a property manager with The Dolben Company, has seen firsthand how crafty these schemes can be—and how important it is to catch them before the lease is signed.
In one case, Varrecchia encountered a prospective tenant whose application seemed legitimate—until something odd surfaced. The applicant submitted a different ID at two Dolben properties, each ID bearing the same photo but with conflicting personal information. To Varrecchia, this wasn’t merely an administrative hiccup. It signaled a deeper plan: the applicant was likely intending to rent under false pretenses and then sublet the apartment.
This is a classic setup in the world of subletting fraud. Typically, it unfolds in one of two ways. In profit-driven subletting, scammers lease apartments and re-rent them at inflated rates, often through platforms like Airbnb.
In more sinister cases, non-payment fraud occurs—fraudsters lease a unit, sublet it to a legitimate tenant, collect rent, and then disappear without ever paying the property owner. The unsuspecting sublessee eventually faces eviction, never knowing they were duped.
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While these schemes may sound extreme, they’re increasingly common. According to MRI Software, reports of applicants trying to secure multiple apartments under various identities are coming from a variety of management companies. The cost of these scams is steep: missed rent payments, legal battles, and damage to brand trust within communities.
This evolving threat requires a proactive approach. Advanced ID verification tools, especially those that cross-reference with DMV databases, can significantly increase the detection of fake IDs. Adding device verification during online application processes further tightens security, ensuring the person behind the screen is who they say they are.
Early intervention is key. Checking identification as early as during the apartment tour can block fraudsters from entering a property’s system at all—saving teams countless hours and headaches down the road. Ideally, this step includes phone number verification and real-time ID validation to add another layer of defense.
Consistency is equally important. At move-in, property managers should confirm that the person collecting the keys matches the identity on the lease—not just in name, but in photo and documentation, again through ID validation. At this stage, verifying ID isn’t just about catching a fake—it’s the only chance to stop a second fraudster from picking up keys using a fake ID with his or her photo but the fraudulent applicant’s details.
And while scammers rely heavily on platforms like Airbnb to carry out their schemes, property managers can use these same platforms to fight back. Regularly monitoring short-term rental sites helps uncover unauthorized listings that may violate lease terms and expose fraudulent activity.
Though awareness of subletting fraud is growing, bad actors are already adapting—and fast. “The growing sophistication of fraudsters means we have to continually adapt our verification process,” Varrecchia said. “It’s no longer just about checking IDs—it’s about ensuring every applicant is thoroughly verified at multiple stages of the leasing process.”
The stakes are high. For property owners, failing to act could mean more than just lost rent—it could mean losing the integrity of their entire community. But with vigilance, technology, and a layered approach to verification, they can stay one step ahead.
Source: GlobeSt.
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