93% of landlords hit by rental fraud: Inside the rise of 'apartment packages'

Report: Increasing fraud impacting rental housing costs

Apartment owners nationwide are reporting a 40% increase in people using fake ID's, Social Security numbers, and paystubs to apply for apartments that they can't qualify for on their own, according to the National Multifamily Housing Council.

What we know:

Houston - Apartment owners nationwide are reporting a 40% increase in people using fake ID's, Social Security numbers, and paystubs to apply for apartments that they can't qualify for on their own, according to the National Multifamily Housing Council.

Ninety-three percent of landlords nationwide say they've encountered the problem.

Investigators say some of these fake financial documents are from people offering so-called "apartment packages" on social media.

We found one post that says $400 includes "a new credit profile," and "proof of employment & rental history." Another post offers paystubs, SSN hard copies, and banking documents.  

Local perspective:

"The vast majority of the people would be fake. It was more than half of them," said Steven Moore.

Moore and his company, Villa Serena Communities, own 14 apartment communities in the Houston area that primarily serve lower-income renters.

He says the problem of applicants using fake financial documents is widespread, and some slip through the cracks.    

"They pay one month’s rent and stop paying rent, and we have to get them out. And they use the appeals process, and they’re in there two to three months.  It raises our cost of doing business," explained Moore.

What are the impacts?

Big picture view:

"Mitigating a single case of rental fraud could be as costly as $15,000," said Kevin Donnelly, Executive Director of the Real Estate Technology & Transformation Center.  

Donnelly says the rise in fraudulent applications is adding to a challenge in Houston and many major cities: a shortage of affordable housing.

"They are depriving a housing unit from a family that really needs it and would otherwise qualify," he said.

While fraudsters are using AI to create fake documents, many landlords like Moore have started using software that uses AI, such as Snappt, that helps detect fakes.

But as a landlord known for compassion and giving many low-income renters a second chance, Moore says that's becoming harder to do.

"Anybody that abuses the system makes it harder for the needy people. We could be way more holistic and willing to take a chance on people," said Moore.

What they're saying:

We asked TikTok how it's responding to people selling fake financial documents on the platform.  

TikTok took down some posts we pointed out that were offering financial documents, and sent us a statement reading:  

"We aim to remove content or accounts that violate our rules before they are viewed or shared. Content first goes through an automated review process. If content is identified as a potential violation, it will be automatically removed, or flagged for additional review by our moderators. Additional review will occur if content gains popularity or has been reported."

Industry experts say the rise in fake applications comes from a combination of socio-economic pressures: a lack of affordable housing, rising rents, and renters who either don't earn enough income to qualify or have evictions in their rental history.

We sent a message to a woman offering CPNs, or Credit Privacy Numbers, on her social media page to help renters qualify for apartments.  

She wrote back, "We help you get approved utilizing an alternative credit field known as a cpn... we create a profile in bureaus then add 1 tradeline... u find a place and we check that it will work then we apply using the profile and the verifications needed.  U pay for the application fees. After u get approved we can help u get funding..."

New Texas law

What's next:

The State of Texas just implemented a new law to help combat rising fraudulent applications.  It streamlines the eviction process, requiring court hearings within 21 days. Tenants can appeal evictions, which can add several weeks, but they must either pay bond and rent to the court, a deposit, or file a Statement of Inability to Pay Court Costs.