Multifamily is struggling to navigate the uncharted waters of 2020-2021. At the same time, criminals never let a crisis go to waste, which opens the door to new challenges in combatting online fraud before an applicant moves in.
To better understand and overcome this growing challenge, TransUnion conducted an in-depth industry study: Fraud in the Multifamily Industry. This thorough analysis of fraud trends showed the extent of the problem and how industry leaders are responding to it.
TransUnion’s fraud investigation revealed that the number of fraud triggers flagging high-risk applicants who failed authentication has risen steadily over the course of the pandemic.
In the face of mass unemployment, the expiration of the CARES Act, and the fact that 51% of Americans are financially impacted by COVID-19*, multifamily executives are increasingly concerned about potential residents’ attempts to sidestep rental obligations.
A full 67% of those surveyed said they were more concerned about fraud now than before the pandemic. And they have reason to be: from March to August 2020, 22% of applicants failed an authentication or were identified as high risk.
The spike in fraud instances during COVID-19 also marks a 5% year-over-year increase compared to August 2019.
New, more sophisticated types of fraud
Many current identification methods and legacy systems can’t thwart the sophisticated new fraud techniques born from the dominance of online applications.
Market volatility has caused even more concerns about fraud. When asked about the economic downturn, executives said fraud incidents have become more prevalent, exploding by 48% since the pandemic began. A full 60% of multifamily executives say the pandemic has negatively impacted business.
The top issues executives say they’ve experienced
- Time spent on application review: 59%
- Increased bad debt: 54%
- More evictions: 44%
- Financial losses: 43%
Moving forward during uncertain times
The report highlights the dangers the industry faces now and in the future. And multifamily executives are going through significant changes in how they approach screening applicants. With fraud having increased dramatically ― nearly 50% ― since the pandemic began, it is more important than ever for owners and operators to keep fraudsters out and let good applicants in. The time is now to ensure you have a solid fraud identification as your front-line of defense.
To track the trends, TransUnion is conducting monthly surveys to keep you informed.
See the results of our Rental Housing Financial Impact Study here.