Rental Application Fraud Example

We are seeing more and more application fraud every day.  Some of it is rudimentary like claiming they live with friends and family when we can see they have been renting somewhere.  Others are more sophisticated and are using stolen identities.  I have been told by law enforcement that some fraud is even being committed by organized gangs.  Often the applicant looks good or too good, they get approved, move in and blow up within 6 months and are evicted.  This costs the owner a lot of money in lost rent and another turnover within 6 months.  Plus we have to scramble to fill the unit and we don’t get paid to fill it a 2nd time in 12 months.  I had written about this previously.

Below is an example of one case we recent caught during the application process.  Maybe it will help you look a little deeper at each applicant to make sure you don’t approve one.  My leasing manager sent over an email one Saturday morning asking me to take a look at an application that had some odd discrepancies.

The backstory from my leasing manager:

• The rental reference came back positive with no negative comments, just one word answers.  But according to the credit report there is an open collection from 3 months ago for rent at an apartment complex in Brooklyn Center.  Red Flag-The landlord that completed the rental reference (from where he has lived for 6+ years) said he did not owe any outstanding balance.
• When the leasing manager called the phone number provided on the application for the landlord, a woman answered with screaming kids in the background and said she would call right back.  Five minutes later the leasing manager gets a text from an email address (the email address that sent the text was loveselffirst14@gmail which is different than the one on the application where the original rental reference was sent) that said:  “Hello, this is Mr. Dave Smith, how may I help you”.  After a couple text back and forth, Dave Smith says that he is getting on a plane and needs to reply later.  Red Flag-While many people have funny email handles, this gave no indication if it was Dave Smith.  Why would the landlord not be sending an email from the original one that completed the rental applicant and not some personal email?  Plus, why did a women answer the phone and now Dave Smith is emailing back?  Could it be the applicant behind this email?
• My leasing manager then emails the “landlord” at the email on the application this message: “Due to higher instances of fraud we were hoping we could get some quick confirmation that you manage or own the property. We also noticed there is a collection on the applicants report from your apartment building but you gave good marks on the rental reference, thanks for any info you can provide”.   To which the “landlord” replies:
  • Good afternoon,
    Sir sorry for the misunderstanding and communication. I did give good reference towards my ex tenant because what he had on his record is cleared up. He worked everything out with us and also I would like to let you know that I manage the Property and he’s good to go I
    Do Appreciate you reaching out. Thank you and yes, I am heading out of town and I appreciate u for your time and patience. Thank you have a blessed weekend.  Red Flag-Why would you put someone into collections 3 months ago, but then say that everything was cleared up and then not take the collections off their record?   As a landlord, would you not explain more details about how this tenant “worked everything out”.  If you were a landlord, you would not see how suspicious this looks and would give more details to put the new landlord at ease.
• Now the leasing manager is suspicious so he replies to that same email, “Thank you, I will need documentation that you manage or own the property”.  The landlord sends over a property management agreement maybe 2 hours later (which is impressive that a fraudster would even know what this is).  The agreement was typed out, but there were many strange items on it such as:
  • On page 2 of the agreement, it says the cost is $1000/month to manage this and another property.  The agreement says the property manager get a $1500 “bonus” when the contract is signed and another $1500 “bonus will be paid at completion”.  Red Flag-As a property manager I want this deal!  No way that any landlord is going to pay $1000 a month for someone to manage 2 single family homes in Minneapolis.  Plus, the landlord pays a “bonus” fee when they sign the contract of $1500?  And what is the language “paid at completion”-completion of what?  I don’t know any landlord that would sign this contract.
  • According to the “management agreement” sent by the landlord, the second house listed as Brooklyn Center, is actually in Minneapolis.  It also had the wrong zip code.  Red Flag  Strange that the owner of the property signing a contract would not have corrected that.  That second home does not have a Minneapolis rental license and it homesteaded (for those of you not in Minnesota, that is a small discount on your taxes you can get if you claim this as your primary residence).
  • The agreement says it went into affect 5 years ago.  Red Flag-If you were a legit property manager enough to have a contract, why is there no rental license on that Minneapolis home?

As a result, I have accepted my leasing manager’s challenge.  It is Saturday morning, I am sitting with my cup of coffee, I love a good investigation.

Here are the Red Flags I find:

• We now get a photo of all applicants driver’s license as part of the application process. This applicant’s drivers license says:  6404 Zane Ave N and that same address came up on his credit report, but the he entered 6440 Zane as his current residence where he lived for 6 years.
• I Googled both 6404 and 6440 Zane and neither were found.  Looking at Google maps, everything on that side of the 6400 block of Zane is a huge apartment complex with the same apartment complex name of where the collections account is from on the applicant’s credit report!
• To validate his income, he uploaded his pay stubs, but they had many issues:
  • He submitted a pay stub that says “Marquies”, but both the application and the driver’s license say Marques.
  • In the Company Address field on the paystub it said this:  5072229123, 12325 Main Street, COON RAPIDS MINNESOTA, CA 55316.
    • I Googled the Coon Rapids address and it was the company name that was listed on the paystub.
    • Why does it have CA at the end of the address?  If this was coming from a payroll system, I would think someone in HR would have corrected that.
    • I called that 507-222-9123 phone number on the company address line on the pay stub. I got some guy’s VM that says “this is Jonathan for Janitorial Services at Carlsbad Air Force Base”.   Odd that this phone number is on your pay stubs.
  • In the Company Name box it said “Ace Hardware”, but if you have ever seen an Ace or some other franchise of hardware store, they always have a name in front of that like Frattallone’s Ace Hardware.  So again, if this is a legit paystub coming from a payroll system, why would they not have their legal company name on the paystub?
  • I also thought it was odd that the pay period end was the same as the pay date (ie:  pay period=2/24-3/10, pay date=3/10). Typically, the pay period end and pay date are a week apart so payroll can be processed. If you work on Friday you typically are not paid for 2 weeks on the same day!
  • Lastly, does a hardware store employee really make $28/hour which is $67k per year.  If so, good for him, but that seems a little much.
• I Googled this applicant and found a Facebook page where the photo on the page looks like the photo from the application (Findigs-our screening software requires that you not only take a photo of the front and back of your ID, but also take a selfie using the app).  His Facebook About page says that he is a cook at some group home (not working for Ace Hardware).
• The application said his current landlord was PCO llc.  The MN Secretary of State has no PCO llc registered.
• The address on the management agreement for PCO llc is a vacant park across the street from Brooklyn Park city hall.
• Findigs did find his credit report (cause they use more than just social security numbers), but the social entered by the applicant was different than the one found for him.  Was he trying to deceive us or just mis-typed like he did with his street address?

While we can’t spend 2 hours researching every single applicant, we have really started to question anything that looks out of order.  Fraudulent applications may waste your time, but if you approve that person, it could cost you thousands of dollars in lost rent and months to get them out of the property.  Stay vigilant.