Landlords Report Costly Tenant Scams

A landlord in Elgin, Illinois reported to police last week that a rental applicant tried to pull a scam that would have cost thousands of dollars.

According to a police report published in the local news, the landlord ran an ad in Craigslist for a vacant apartment.

After discussions with an applicant, apparently over the phone, the out-of-state tenant promised to wire $1,900 to cover first month’s rent and the security deposit.

Instead, the tenant sent a check for nearly $9,000 and asked the landlord to wire him the balance.

The landlord became suspicious according to the report, and spoke with the issuer’s bank about the check. He was told there was no such account number.

A similar scam was used against a landlord in North Vancouver last fall. Police there reported that the landlord lost almost $6,000.

In that case, the sophisticated scammer posed as an overseas doctor who needed to rent the apartment sight unseen, and sent enough money to cover a year’s lease.

A few days after making the payment, the fake doctor claimed he had an emergency and needed to back out of the deal. He negotiated with the landlord to return some of the money. The landlord returned $6,000.

A short time later, however, the bank told the landlord that the initial transaction was cancelled because it was found to be fraudulent. The scammer apparently knew that confirmation of fraud can take the bank up to 21 days. Since the landlord had deposited the fraudulent check, he was left responsible for repayment of the loss.

To avoid being ripped off by tenant scammers, police suggest that landlords avoid any wire transfer payments, because these are virtually untraceable. Similarly, stay away from cashier’s checks. These are commonly used in fraud schemes and are much harder to identify as fraudulent on the face.

Out-of-state applicants have the easiest time perpetrating fraud on landlords  in part because it is easier to fake an out-of-state ID. The landlord may not be familiar with another state’s ID in the first place, and a fake is further camouflaged by email scans or faxes. 

It is also easier to find landlords who do not order tenant screening reports before they agree to lease to an out-of-state applicant. This is especially true when the scammer makes the deal seem too sweet to pass up, like offering to pay more than market rate, or paying several months in advance.

Landlords can avoid many tenant scams by strictly following a diligent tenant screening process with each applicant. That process should include a completed rental application, a face-to-face interview with the applicant, a tenant background check, and talking with the previous landlord.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 5 comments… read them below or add one }

Paul July 26, 2011 at 11:31 am

I was contacted by a ‘medical student’ from ‘England’ via email. This first tip that this was a fraud was the horrible use of the King’s English. I have know a lot of English people, they have all done very different things, but they all have had excellent use of the language.

patricia July 26, 2011 at 12:38 pm

I have had the above tried on me, but I phoned the Police, and they said they could do nothing. The check was written on a UBC bank account, and the prospective tenant was in a Southern State. i sent the check back to the address that was written on the envelope and It was returned to me. I ended up sending the check to UBC. Last I heard.

Paula July 26, 2011 at 6:36 pm

Craigslist explicitly warns people of this very thing… read the notices posted on Craigslist – this can save you or break you if you don’t. (this type of thing happens to those who post on Craigslist more than other places, I believe…)

Deborah Spagnuolo July 28, 2011 at 1:40 am

If you don’t think like a criminal, you’re not likely to know right away that this is a scam. Thanks for the information. Very helpful!

romeo castro August 3, 2011 at 6:40 pm

The above scam was tried on me. A check of $4500 was mailed to me. I checked with the bank for validity of the check and the bank said the check was fraud and the bank took the check.

I checked with the bank twice, the first time i checked, the bank said it was a good check and has funding but i did not deposit it yet. I waited 2 weeks and checked again with the bank and discovered the check was fraud and confiscated the check.

Of course the issuer of the check was asking for some of the money claiming the check he gave me was over the amount of the rent of the apt. I did not give him any change and i finally respond to him that the check was a fraud and the bank confiscated it.

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