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Home Market Research Investing

Rental Scams are on the Rise—Here’s How to Protect Yourself and Your Investments

by TheAdviserMagazine
1 month ago
in Investing
Reading Time: 7 mins read
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Rental Scams are on the Rise—Here’s How to Protect Yourself and Your Investments
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In This Article

It’s every landlord’s worst nightmare: being scammed by their tenant. As if there weren’t enough scams around, ripping off landlords is becoming increasingly popular. Whether it’s seeing your rental apartment listed online by someone else or receiving fake employment and financial documents, dealing with con artists is one of the reasons why many investors decide that being a landlord is more trouble than it’s worth. 

According to HousingWire, 93% of landlords have discovered fraudulent tenant documents, and 84% have uncovered false income or employment claims. Fraud detection and income verification software Snappt reported that 6.4% of rental applications were fraudulent in 2024—scams are becoming increasingly sophisticated. 

Snappt and rentprep.com have listed some of the most common scams landlords need to be aware of. However, HousingWire reports that scammers are evading fraud detection software by using forged pay stubs, altered credit reports, and fake employment letters. Mom-and-pop landlords who own single-family homes and don’t have the financial resources of larger apartment buildings are increasingly in the scammers’ crosshairs. 

Career Scammers

One of the most egregious recent scams involved Russell and Linda Callahan, who were indicted for orchestrating a rental scam that stretched out for 20 years in Worcester County, Massachusetts. Among their list of fraudulent activities were bouncing security deposit checks, lying on applications, and defrauding landlords out of over $100,000. 

Fake Landlords

Being a fake landlord is another popular scam technique, where listings are posted on social media, and prospective tenants hand over thousands of dollars with no legal right to be in the property. 

Generally, online rental sites like Zillow, Realtor.com, and Apartments.com have more robust fraud protection software in place, with inquiries directed to real estate agents, but social media sites like Facebook Marketplace and Craigslist are the wild west when it comes to fake listings, because it’s where smaller landlords tend to post, making them easily searchable and able to be defrauded. 

Rental management platform Rently reported that, as of 2023 numbers, fake rental listings have led to a 45% increase in rental scam complaints reported to the FTC and Better Business Bureau over the last two years. Victims often lose their security deposit and first month’s rent. According to a Rently survey, about half of the respondents lose $1,000 or more, and 8% lose over $5,000.

“As housing demand surges, scammers are exploiting renters’ desperation with alarming precision,” Rently CEO Merrick Lackner said in a press release. “Beyond the financial loss, these scams create lasting emotional harm, turning what should be an exciting step into a source of stress and heartbreak.”

AI Will Increase Scams

Snappt’s 2024 Fraud Report: Data, Trends, and Strategies for 2025 suggests that artificial intelligence (AI) will play an increasingly significant role in would-be tenants scamming, with ever-sophisticated ways of manipulating documents.

“As fraud continues to evolve in 2025, leveraging best-in-class document fraud detection and income verification technology is the only way to catch these bad actors before they result in financial losses,” said Snappt CEO Daniel Berlind in the company’s release.

The South Is America’s Scamming Heartland

According to Snappt’s Top U.S. Cities for Application Fraud 2025, Atlanta is America’s No. 1 city for application fraud, with a 17.9% rate in 2025. Houston is second (16.2%), followed by Dallas/Fort Worth (13.2%). 

rental scams by market

“Over the past two years, there’s been a noticeable increase in rental scams, with a greater concentration in the Houston area,” Michael Molloy, director of the Texas Real Estate Commission, said in a press release. “These scams are deceiving landlords, tenants, and even our license holders into fraudulent lease agreements.”

Using an Agent Helps Protect Against Fraud—Sometimes

The fail-safe way to avoid falling victim to a rental listing scam as a prospective tenant is to meet the “landlord” in person. For actual landlords, using a licensed Realtor is the safest way to ensure a tenant is not a scam artist. These professionals have a license to protect and access to company software, which is likely more rigorous than that of an investor. However, even some agents are not savvy to the methods used by seasoned tenant scammers.

A property owner in the celebrity-studded neighborhood of Calabasas in Los Angeles used a reputable real estate agency to find tenants for her home. After they moved in, they filed a litany of complaints, hired lawyers, and immediately stopped paying rent while hosting parties. Within four months, the tenants cost the owner $100,000 in damages.

“They turned my home into one of these megamansion party houses like you see on the news,” owner Cheri Woods told the New York Post. 

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One New York horror story, depicted in New York Magazine, describes the ordeal of a Manhattan landlord who allowed a seemingly well-paid architect with impeccable credentials into her condo—only to have him demolish the interior and demand money to leave. It turned out he had done the same thing to other landlords in the past, but expertly covered his trail.

Seasoned agents should now be prepared to go the extra mile to screen tenants. “Many, many agents will run a credit check on behalf of an incoming tenant, but not a criminal background check,” Douglas Elliman agent Carl A. Ekroth told the Post. “When qualifying any potential tenants, landlords should always insist on both.”

Owners Should Oversee Their Agents

Los Angeles-area real estate investor Jameson Tyler Drew of Anubis Properties advises that landlords should not rely solely on agents and should conduct their own due diligence on the individuals they hire to vet their tenants. 

“I love my profession, but I will be the first to tell you that there are some people in this business who shouldn’t be,” Drew told the Post. “I’ve seen agents and brokers knee-deep in all manner of scams.”

Ways Landlords Can Protect Themselves From Scammers

So if you’re a landlord, how do you make sure you don’t fall prey to these common scams? Here are five steps to take.

1. Strengthen screening and authentication

Demand verifiable ID and income documentation. Use tools with enhanced identity verification, document authentication, and credit and background checks. Apply AI technology screening solutions to flag inconsistencies and identify sophisticated forged documents.

2. Know the overpayment red flag

When a tenant overpays and requests a partial refund, be cautious. It’s a common scam. Verify the authenticity with the bank.

3. Create clear policies around subleasing, and check listing sites

Avoid listing your apartment on short-term rental sites by prohibiting subleasing in your lease.

4. Monitor listing sites and brand your own rentals so others cannot use them

Watermarking your listing photos is an obvious way to deter scammers from listing them on the Internet. Be sure to stay informed about what websites are posting.

5. Insist on secure payment methods through verifiable platforms

Avoid wire transfers, cryptocurrency, and gift cards.

Final Thoughts

Check with local districts about the landlord-tenant policies in your area. In New York, professional tenants have been known to be allowed to remain in apartments for over a year without paying rent. Ideally, however, you would have stopped a scamming tenant long before they set foot into your apartment.

Sometimes, landlords are so desperate to fill their units that they shortcut the vetting procedures. You could be setting yourself up for a whole world of hurt. The more specific documentation you require, such as bank statements, letters from employers, and background checks, that you can verify, the more you will deter scammers. 



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