How Real Estate Fraud Can Lead to Identity Theft and Financial Loss

Understanding Real Estate Fraud  

In the real estate industry, scams have become a prevalent problem. According to the Association for Certified Fraud Examiners 2024 Report to the Nations, the median loss in the Real Estate industry was $200,000. Deposit fraud and fake applications are two of the most prevalent forms of fraud. These can significantly impact personally identifiable information (PII), leaving landlords and renters vulnerable to identity theft, financial loss, and reputational damage. It is essential to understand how these scams work and the steps that can be taken to protect oneself from these threats. 

Key Takeaways:  

• Real estate fraud can have a significant impact on landlords and tenants.  
• Remain vigilant: never send a deposit before viewing a property and always verify credentials before initiating business.  
• Deposit scams trick tenants into sending money.  
• False applications involve bad-faith actors using stolen PII to submit fraudulent rental applications.  

Common Types of Real Estate Schemes 

Deposit Scams 

Deposit scams are among the most common types of real estate scams. They involve fraudulent schemes designed to trick potential tenants into sending money to scammers. These scammers often pose as legitimate real estate agents, property owners, or managers, using tactics such as offering rental discounts or special promotions to lure tenants into sending a deposit before viewing the property. Once the deposit is received, the scammers disappear, leaving the tenant with no rental property and no way to retrieve their money. 

False Applications 

Fake applications are fraudulent applications for rental properties. Scammers use stolen PII to submit fake rental applications, often including a fake deposit payment. This type of scheme can be challenging to detect, as the scammers use stolen information to make the application appear legitimate. Once the landlord approves the fake application, the tenant occupies the unit, leaving the real property owner with an unqualified tenant.  

Deposit scams and fake applications in the real estate industry can have a negative impact on both landlords and tenants, leaving them vulnerable to identity theft, financial loss, and reputational damage. It is essential to remain vigilant and take precautions to protect oneself from these scams. 

Understanding the Impact of Fraud in Real Estate  

Financial Implications Leading to Identity Theft 

The impact of these types of fraud can be severe, as scammers often have access to sensitive information, such as social security numbers, bank account information, and credit card details. This information can be used to commit identity theft, resulting in financial loss, damage to reputation, and compromised credit. 

 Due to the damage caused by scammers, tenants may be denied future rental or credit applications, resulting in long-term consequences for both tenants and landlords. 

Best Practices to Avoid Real Estate Scams

To protect from deposit scams and fake applications in the real estate industry, it is essential to remain vigilant and take proactive precautions. Tenants should verify the credentials of the real estate agent or property owner and view the property before sending a deposit. The tenant should remain cautious about sharing PII with anyone, only providing sensitive information to trusted sources.  

With specialized knowledge in real estate, finance, fraud protection, and outsourced IT, EisnerAmper’s dedicated team is here to help. Contact us below to see how you can protect yourself, your business, and your tenants or clients.