When Robyn Flynn recently rented a home in South Lake Tahoe, Calif., she found herself with a shady landlord who refused to make repairs. Like many renters, she didn’t know anything about the landlord before she moved into her new place.
“I always owned a home before this move, so I wasn’t sure if the landlord was typical or if he had a bad reputation,” said Flynn. “A friend of mine in Boston told me about this service called MySmartRenter that I could use, and I found out that the landlord has multiple lawsuits against him for not taking care of his rental properties.”
For Flynn, learning about the lawsuits will give her extra knowledge she can use when confronting her landlord about the condition of her home. She also plans to proactively investigate a landlord before she rents again.
While Flynn’s situation revealed a bad but not necessarily fraudulent landlord, rental fraud is unfortunately common. A study by ApartmentList.com found that 43.1 percent of renters have come across a listing they thought was fraudulent and that 5.2 million renters in the United States have lost money to rental fraud.
“A lot of rental fraud happens when people can’t see a rental in person because they are renting long distance,” said Igor Popov, chief economist at Apartment List in San Francisco. “Unfortunately, I suspect we’re about to see more of this because of self-isolation and social distancing during the pandemic.”
One in three victims of rental fraud lost more than $1,000, and 17 percent-plus were out more than $2,000, said Popov, noting that it’s usually a security deposit or the first month’s rent for a nonexistent rental.
Rental fraud often involves listings that are not available or don’t exist at all, said Popov.
“The most common scenario is a ‘bait-and-switch’ scheme where a landlord advertises a unit, accepts a security deposit, and then later reveals that particular apartment isn’t available,” said Popov. “Renters may lose their deposit or end up with a less desirable unit.”
Two other common types of fraud occur when a scammer hijacks a legitimate listing or makes up one for a nonexistent home.
“For example, the scammer will take a legitimate real estate listing for a property that’s for sale and download the photos and address,” said Popov. “They’ll collect the security deposit and disappear before someone realizes that the property isn’t available for rent.”
Other issues include rentals that are missing promised amenities, such as heat, air conditioning or laundry equipment. In that case, the landlord tries to get the lease signed and all of the deposits before the renter discovers the problem.
“Unfortunately, younger renters tend to be victimized more than older renters, with about 9 percent of 18-to-29-year-old renters reporting that they lost money compared to 6.4 percent of all renters,” said Popov.
One possible protection is the app George Genel, CEO and founder of MySmartRenter.com in Concord, introduced in January. It provides renters with information about prospective landlords.
“Tenants are used to paying for landlords to check their credit, but nobody thinks to check on the landlord,” said Genel. “There are subjective sites that people use to check out an apartment or a landlord where people post complaints, but that’s not always fair to a landlord who gets a complaint about not changing a light bulb when he was out of town.”
Genel’s app won’t necessarily prevent all renter fraud, but users can pay a flat fee to learn more about a potential landlord.
“We designed the app so that renters don’t have to request permission from a landlord to run a check on them,” said Genel. “A renter just needs the name of the landlord and address of the rental, then we are credentialed and compliant with the Fair Credit Reporting Act to pull nationally available information on someone.”
MySmartRenter.com costs $19.95, $34.95, or $49.95 for different levels of searches, with the basic level verifying that the landlord owns the property being rented and checking the national sex offender registry and for civil court actions. Other levels include a criminal background check, bankruptcies, liens, and professional licenses. Parents of students renting off-campus housing can use the app, and landlords can proactively be certified by it.
The most important step any renter can take to prevent becoming a victim of fraud is to gather information about the local rental market and a specific rental, said Popov.
“Visit the property in person if you can,” he said. “Verify that the landlord owns the property by checking city records or asking the building manager. If someone tells you that you can’t see the property in person, then that’s a red flag that something could be wrong.”
Other potential red flags, said Popov, include a lack of photos or only exterior photos, prices that are not typical for the market, or requests for a security deposit made with cash or a wire transfer. It’s best to pay with a credit card or a check so the payment can be cancelled if necessary.
Renters must be vigilant and verify as much as they can about a rental before they sign paperwork or provide money. If you are victimized, you can report fraud to the Federal Trade Commission, local law enforcement, or the Massachusetts Office of Consumer Affairs hotline at 888-283-3757.