Organizations of all portfolio sizes are encountering fraud
Technology Is the Cause and the Cure for Multifamily Fraud
There is a particular irony in the current state of the multifamily industry. The same technological forces that have made property management faster, more scalable, and more data-driven have also handed bad actors a significantly more powerful set of tools.
Generative AI can now produce convincing fake pay stubs, bank statements, and identity documents in minutes. The good news is that technology is also the most promising tool available for combatting these new threats. Understanding how requires a clear-eyed look at how bad actors are operating, how operators are responding, and what the gap between those two things still looks like.
Organizations of all portfolio sizes are encountering fraud at least once every few months, a frequency that reflects just how normalized the problem has become.
In MRI Software’s 2026 Multifamily Real Estate Pulse Check survey, which gathered responses from more than 700 multifamily professionals, credit history fraud and fake AI-generated documents were reported as the two most common fraud types. “As AI has advanced, the ability of bad actors has gone with it,” said Carla Hinson, VP of Solution and Innovation at MRI Software. “Over half of the respondents had encountered fraud. That is significant.” What is particularly striking is where that fraud is concentrating.
That shift is forcing the industry to rethink what the leasing process needs to look like from a security standpoint. For years, the primary defenses were background checks, credit pulls, and employment verification, all of which remain in widespread use. The MRI survey found that background checks led fraud prevention strategies at 91% adoption, followed by employment verification at 88% and resident or AI screening platforms at 85%.
Those tools are necessary but no longer sufficient on their own, particularly as the documents they’re designed to validate become easier to fabricate. The more effective response is to make the application process itself harder to game, and technology is enabling that in ways that go beyond simply checking documents more carefully. “If you are a bad actor with falsified docs, there is always a chance you are going to give up if you have to upload them,” Hinson said.
Friction, deliberately built into the application workflow through required uploads, multi-step verification, and digital documentation requirements, changes the risk calculus for fraudsters. It doesn’t eliminate fraud, but it raises the effort required to commit it and creates a paper trail that makes it easier to detect and respond to when it does occur. Moving interactions into structured platforms where everything is logged and timestamped shifts the operational environment away from one where fraudulent submissions can pass through undetected.
The problem extends beyond the application process into the leasing experience itself, particularly as self-guided tours have become more prevalent across the industry. The convenience that self-guided tours provide to prospective residents also raises a straightforward security question: are the people requesting access to a property actually who they say they are? The older approach to this problem, holding a physical ID at the front desk or keeping it on file during a tour, was always more of a deterrent than a genuine verification method, and it offered little protection against convincing fakes.
“For leasing tours, the old way was just to lock up the prospect’s ID,” Hinson said. “Scanning it and verifying it first works much better and is much safer, since IDs can be faked.” Digital ID verification tools, which cross-reference scanned identification against authoritative databases in real time before access is granted, address the self-guided tour security gap in a way that manual inspection never could. They also create a documented record of who accessed a property and when, which has value beyond fraud prevention in the event of an incident.
What makes the fraud picture particularly complicated is the uneven confidence the industry has in its current defenses. Overall, just 39% of survey respondents said they felt confident in their existing fraud prevention strategies, while 36% were not confident and 26% were somewhere in between. That split is striking on its own, but the breakdown by role makes it more so. Property managers expressed confidence at a rate of 51%, while executives came in at just 28% confident and 46% not confident.
The gap between the people managing individual properties and the people overseeing entire portfolios likely reflects a difference in visibility. A property manager working a specific building may feel reasonably assured by the tools and processes they use day to day. An executive looking across dozens or hundreds of properties, many of which they aren’t operationally close to, sees the aggregate exposure more clearly.
That divergence matters because fraud prevention strategy is typically set at the executive level, based on a portfolio-wide view. When the people making those decisions are significantly less confident than the people implementing them, it suggests that the industry’s defenses may be less consistent across portfolios than operators would like to believe.
None of this is happening in a vacuum. The broader technology environment that shapes the fraud threat is also reshaping the tools available to fight it. The same AI capabilities that allow fraudsters to generate convincing false documents also allow screening platforms to detect patterns across large volumes of applications that no human reviewer could catch.
The 93% of multifamily organizations currently using AI tools in some capacity are increasingly deploying those tools not just for leasing efficiency and predictive maintenance but for risk identification. The industry arrived at this moment the way it arrives at most inflection points: not by design but by necessity.
Technology created the conditions for a new generation of fraud. Technology is now being asked to contain it. The operators who understand that those two forces are inseparable, that every advancement in capability is simultaneously an advancement available to bad actors, will be the ones who stay ahead of a problem that shows no sign of resolving on its own.
Source: Propmodo
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