Landlords and property managers are facing a surge in sophisticated rental application fraud, with technology making it easier for bad actors to forge documents and evade detection. Joel Rodstein, CEO of North Oak Property Management, manages 185 buildings in Los Angeles and now spends hours each week scrutinizing paperwork for signs of deception.
“I spend two to three hours a week just reviewing paperwork like this,” said Rodstein, referring to rental applications. The rise in fraudulent applications has shifted what was once an administrative task into a high-risk area requiring significant oversight from management.
Fraudulent tenants often exploit eviction protections, staying rent-free for months before landlords can remove them. According to Snappt, an Ojai-based provider of fraud-prevention software, the average eviction costs landlords $7,685 in legal and administrative fees.
Rodstein’s company invests about $18,000 annually—roughly $10 per applicant—in fraud detection tools. Other firms pay even more; Balanciano Group reports spending about $25 per tenant application on such measures. “As fraud became more sophisticated, we implemented better tools, smarter systems and stronger safeguards,” said Shawn Evenhaim, CEO of Balanciano.
Sky Properties has adopted several layers of verification including linking credit reports to bank statements and using AI-based ID checks. These steps increase costs and slow down leasing: Kari Negri, CEO of Sky Properties, notes that processing time has tripled from one day to three days per unit—a delay that translates into a daily loss of $117 per vacant apartment at a monthly rent of $3,500.
The prevalence of fraud is supported by industry data. A National Multifamily Housing Council survey released in January 2024 found that over 90 percent of rental housing operators encountered some form of fraud within a year. Of the average $4.2 million in bad debt reported by providers annually, roughly one quarter stems from fraudulent applications or related nonpayment.
Fraud methods range from fake references to advanced digital fabrications like forged pay stubs or composite identities purchased online. The pandemic accelerated these trends as virtual leasing reduced face-to-face scrutiny while economic hardship increased incentives for deception.
Rodstein recounted being unable to evict a scammer during Covid-era tenant protections; only after restrictions lifted did the tenant leave under threat of notice.
Criminal organizations now create shell companies with legitimate-seeming payroll systems and websites to generate convincing but false financial documents. Daniel Berlind, founder of Snappt, explained: “It’s really about kind of creating this web and linking all of these data points together,” referencing connections between IDs, bank accounts and payroll records.
Small landlords are particularly exposed due to less stringent screening processes and lack access to document-fraud detection software. Dan Yukelson from the Apartment Association of Greater Los Angeles said: “The smaller owners are more likely to want to give a break to someone who seems nice…and most importantly do not have a way to get access to document fraud detection software.”
Even large institutional players like Greystar report high rates—12–15 percent—of fraudulent applications nationwide despite rigorous screening protocols. Jamie Teabo at Greystar noted: “The percentages we report reflect only provable fraud…and do not include applicants who abandon the leasing process for fraud-related or other reasons.”
For now, both large and small landlords must absorb ongoing prevention costs as technology continues advancing faster than enforcement mechanisms can keep up. Caren Maio at 100 called it “the Wild West,” adding that counterfeiters operate overseas accepting cryptocurrency or gift cards beyond reach of U.S. law enforcement.
Legal recourse remains limited at state level; attorney Dennis Block said California police rarely pursue even serious offenses like counterfeit cashier’s checks or vandalism against landlords’ properties: “They won’t go after that…They won’t do — nothing.” Federal authorities acknowledge few prosecutions occur except in rare cases involving major interstate schemes.
Entry barriers remain low for would-be scammers; Atlas VPN research cited by Forbes found Social Security numbers sell for as little as $4 on dark web marketplaces while physical passports fetch up to $5,000.
According to Berlind at Snappt: “It used to be just folks doing this at their own home…And now it’s crime rings that are literally creating these entire fraudulent packages for folks … and obviously AI is certainly helping advance their missions.”
