Tips to identify and prevent rental fraud in multifamily leasing

Application fraud is rising—and property managers are paying the price.

As digital tools make it easier for renters to apply for housing, they’ve also made it easier for fraudsters to game the system. In today’s competitive multifamily housing environment, fraudulent applications are slipping through the cracks more than ever before.

According to a 2022 industry survey, 85% of property managers reported seeing a rise in rental fraud, including income misrepresentation, identity theft, and fabricated documents. That’s up from just 66% a few years earlier.

If you're leasing at scale or managing a high volume of units, it’s no longer a matter of if you’ll encounter fraud—it’s a matter of how often.

Here’s how to spot rental fraud before it hits your NOI—and how to protect your portfolio with stronger systems, smarter screening, and a safety net that kicks in when fraud slips through.

What does rental fraud look like today?

Let’s break it down into three broad buckets:

• Application fraud: Submitting false information on a rental application (e.g., fake pay stubs, inflated income, or made-up job titles)
• Identity fraud: Using stolen or synthetic identities to rent a property, often as part of a scam or fraud ring
• Lease fraud: Signing a lease under false pretenses with the intent to sublease illegally, avoid payment, or use the property for unapproved purposes

One property manager shared how a fraud ring applied to six units in a Class B building using identical fake documents and untraceable references. The leasing team caught it just in time—but not without hours of lost time and effort.

And that’s the cost operators are grappling with: not just financial losses, but operational disruption.

Why fraud is getting harder to catch

Three key shifts are making fraud more pervasive in multifamily leasing:

1. Fewer in-person interactions
   Since the pandemic, more tours, applications, and approvals are happening online. This gives fraudsters space to avoid face-to-face questions—and increases the chance that inconsistencies won’t be noticed.
   
   
2. Higher competition
   In tight rental markets, it’s not uncommon for a unit to have 10+ applicants. When screening teams are overwhelmed, fraud can go undetected simply due to speed and volume.
   
   
3. Better tools—for them
   Fraudsters now use AI-generated documents, fake bank statements, even realistic-looking LinkedIn profiles. Without a structured fraud detection system, it’s incredibly difficult for property managers to verify authenticity manually.
   
   

The red flags: how to spot potential fraud early

While tools and automation are critical, it’s still important to train your leasing team on the common warning signs of fraud, including:

• Rushed applications: Applicants offering to pay more, move in immediately, or bypass the standard process
• Credit reports that don’t match pay stubs: Always run your own report—never accept one from the applicant directly
• References that don’t align with addresses: A quick mismatch between listed landlords and credit bureau data is often a giveaway
• Suspicious social media profiles: A real person usually has more than one post, with content that matches their identity and employment claims
• Inconsistent answers during interviews: Even a quick video call can help detect fraud if stories don’t line up with documents
  
  

So how do you protect your properties?

It’s impossible to catch every case of fraud. But with the right strategy, you can drastically reduce your risk—and ensure that even when fraud occurs, your income is protected.

Here are four key layers to build into your leasing operations:

1. Require in-person or video identity confirmation

This simple step is often skipped, but it’s one of the most effective. Even a brief video call gives your team the opportunity to match faces to IDs, ask a few questions, and verify consistency across answers and documents.

Fraudsters are less likely to follow through on a scam if they know a face-to-face interaction is required.

2. Use structured document verification

Don’t rely solely on leasing agents to identify fake pay stubs or bank statements. Instead, use document verification tools that automatically flag inconsistencies, image tampering, or duplicate templates.

Some platforms even compare uploaded documents against thousands of known fraudulent versions to detect patterns you wouldn’t catch manually.

3. Strengthen your screening criteria—and apply them consistently

That means no shortcuts, even for “nice” applicants or those referred by existing tenants. Every applicant should go through the same process:

• Credit report from a trusted provider
• Income verification
• Criminal and eviction background checks
• ID verification
  
  

And when red flags show up, don’t rush approvals just to hit occupancy targets.

4. Add lease coverage as a safety net

Even the best screening process won’t catch everything. That’s where lease coverage can provide peace of mind.

Cosign offers a solution that protects landlords from income loss due to missed rent, fraud, or default. When a renter doesn’t meet your standard qualification criteria, they can apply for Cosign coverage instead.

Unlike traditional insurance, Cosign isn’t meant to protect against fire or flood. It’s designed to protect against people-related risks: fraud, missed payments, early move-outs, and lease breaks.

And since renters pay the cost of coverage, there’s no impact on your bottom line.

How does this fit into your fraud prevention strategy?

Fraud prevention is about layers. No single tool or policy will catch everything. But the combination of human judgment, smart tech, and structural protections can reduce both the volume and impact of fraud significantly.

Cosign isn’t a silver bullet—and it’s not meant to be. But it’s a highly effective tool in a larger operational strategy, especially for landlords managing workforce housing or high-turnover portfolios.

And in a leasing environment where speed matters, giving your team a reliable fallback for edge-case renters means fewer missed opportunities—and more income secured.

Final thoughts

Rental fraud isn’t going away. As leasing continues to move online and as economic pressures persist, bad actors will keep looking for ways to exploit the system.

But with the right approach, you don’t have to be reactive.

• Educate your team
• Use tools that scale with your portfolio
• Screen smarter, not just faster
• And build a buffer that helps protect your rent roll when the unexpected happens

Cosign can be part of that buffer. But the bigger win is knowing your leasing operation isn’t just running—but resilient.

Want to see how other landlords are approaching this? Reach out to us to learn how Cosign fits into multifamily fraud prevention today.