Multi-layered and biometric IDV can prevent pervasive rental fraud: report

Six out of ten property managers said they faced rental fraud in the past two years, according to research from TransUnion’s Multifamily Report. Almost 40 percent didn’t identify the fraud until after the tenant moved in.

It’s significantly harder to stop fraud after someone becomes a resident. “Delinquencies and evictions are expensive and take significant time and effort to enact. In the meantime, the other residents are at risk with fraudsters nearby,” says Maitri Johnson, vice president of TransUnion’s tenant and employment screening business. Fraud created a rise in evictions for 43 percent of property managers.

When it comes to mitigating fraud, property managers are divided on their approaches. Roughly one third outsource services and one quarter use in-house employees who may fail to detect synthetic identities. A third use experience-based risk assessments, essentially relying on their instincts, opening the door for biases while being ineffective.

“Those who rely on their instinct, rather than a formal methodology, put themselves at even greater risk,” said Johnson. “Not only is that not effective for detecting fraud—especially as fraudsters become increasingly sophisticated—it also risks incorrectly and illegally denying housing based on the property manager’s biases.”

Top triggers that helped property managers identify fraud include proof of employment, verifying proof of income, and identifying fake paychecks. Credit scores indicate financial risk, but aren’t enough on their own to indicate multifamily rental fraud.

Multi-layered identity verification and fraud protection can help detect more fraud. TranUnion’s TruValidate ResidentID helps multifamily operators establish multi-layered fraud protection with identity proofing, risk-based authentication and fraud analytics.

Another verification offering, Proof, allows customers to verify their identity for property rentals by going to a company’s website and submitting an ID and a selfie for biometric comparison to verify identity.

The rental company receives a Proof Identity Report that gives the company evidence used in its determination. If Proof rejects an application, a rental agent isn’t at risk of being accused of biases. Those who cannot verify their identity through the software will be connected with a notary from the Notarize Network.

Article Topics

fraud prevention  |  identity verification  |  KYC  |  Proof  |  selfie biometrics  |  TransUnion  |  TruValidate