Throughout the country incidences of rental application, financial and identity fraud are on the rise fueled – in part – by social media.
This NMHC Pulse Survey was conducted from November 15, 2023, to January 9, 2024, and received responses from NMHC and National Apartment Association (NAA) members representing 75 leading apartment owners, developers and managers.
Respondents Report Rampant, Increasing Fraud
Nearly all respondents to NMHC’s Pulse Survey on Fraud (93.3% of the total) reported experiencing fraud in the past twelve months. Of those who experienced fraud:
- 84.3% of respondents have seen applicants falsifying or fabricating pay stubs, employment references or other income documentation;
- 80.0% observed prospective renters misrepresenting information on applications;
- 70.0% reported identity theft, fraudulent ID documents or use of another individual’s personal information;
- 67.1% experienced unauthorized cohabitants, illegal subletting or other actions to evade application or the leasing process; and
- 62.9% of respondents reported the use of fraudulent checks or other payment methods.
The vast majority of respondents (70.7%) also reported experiencing an increase in fraudulent applications and payments in the past twelve months. [1]
- Respondents who observed an increase in fraudulent applications and payments reported a 40.4% average increase – and a 25.0% median increase – in the past 12 months compared to the previous 12 months.
- Of respondents who observed an increase in fraudulent applications and payments, 66.7% said that this increase varied by jurisdiction [2], and many (46.9% of this group) called out Atlanta, specifically, as a jurisdiction where increases in fraud were most concentrated. Texas and Florida were also cited by several respondents as having higher than average concentrations of fraud increases.
Eviction Moratoria, Fraud Led to Nonpayment of Rent
- Seventy-three percent of respondents to NMHC’s fraud survey reported that at least some of the nonpayment of rent they recorded over the past three years could be attributed to the eviction moratorium. [3]
- A majority (58.5%) of respondents said that they experienced an increase in nonpayment of rent due to fraud in the past 12 months. [4]
Nearly a Quarter of Eviction Filings Stemmed from Fraudulent Applications
Respondents reported that, on average, 23.8% of their eviction filings were due to fraudulent applications and subsequent failure to pay rent.
Nearly half (47.2%) of respondents said that this share varies by jurisdiction, with many of this group calling out Atlanta and markets in Texas and Florida specifically.
Nonpayment of Rent Has Translated to Bad Debt
Respondents to NMHC’s Pulse Survey on Fraud were required to write off an average of nearly $4.2 million in bad debt – and a median of $800 thousand – over the past 12 months. Respondents reported that approximately a quarter (24.5%) of this bad debt, on average, could be attributed to nonpayment of rent due to fraudulent applications.
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[1] 18.7% of respondents did not see an increase, while the remaining 10.7% either didn’t know or said the question was not applicable to them.
[2] 12.5% reported that this increase did not vary by jurisdiction, while the remaining 20.8% either didn’t know or said the question was not applicable to them.
[3] 8.1% of respondents said that none of their nonpayment of rent could be attributed to the eviction moratorium, and 18.9% answered “Don’t Know/Not Applicable”.
[4] 22.0% said they did not experience an increase of nonpayment of rent due to fraud, while 19.5% answered “Don’t Know/Not Applicable”.
