What do a Pastor in West Africa, his daughter at school in London and their apartment for rent in Boston have in common? They’re all part of a scam.
As is the case with several areas of our lives today, our search for apartments and rental housing is increasingly shifting to the web. The internet is the first place today’s younger generation checks when seeking out a new place to live. It is much quicker to search for a rental using websites such as Craigslist, Kijiji, or The Rentables than it is to pick up a newspaper and browse through the classifieds. Unfortunately, along with our increasing reliance on these popular online sites, there are new opportunities for fraudsters to take advantage of unsuspecting tenants and landlords.
This article is the first of a 3 part series on online rental scams which explains two common types of online rental scams, their basic operation, and most importantly a few tips on how to avoid them. In Parts 2 and 3 we will dive into greater detail on each type of scam and provide more insight on how you can avoid them.
Types of Scams
There are two major types of online rental scams: those that target landlords, and those that target tenants. Each of these scams can unfold in a number of ways, but they generally share some common traits.
How they Work
For scams targeted at tenants, some rip-off artists will take an existing rental ad, modify the contact information, and post it on another site. Others simply make up listings for places that aren’t for rent or don’t even exist, and try to lure tenants in with the promise of cheap rent. In these cases, their objective is to get your money before you realize what’s happening. Once these fraudsters have collected personal information, first and last month’s rent, and a security deposit, you’ll be out hundreds of dollars and will never receive the keys as promised. To make matters worse, these con artists will be hard at work using your personal information to setup fraudulent credit cards and loans. Like being bilked for hundreds of dollars, cleaning up a case of identity fraud is never a pleasant experience.
The second variation of online rental scam targets landlords, and typically involves some sort of overpayment. In these cases fraudsters will pose as tenants making themselves sound like ideal candidates. They are generally out of the country for some virtuous reason and are either returning from abroad or renting the unit for a child attending school in North America. For landlords who have had trouble renting a unit, these foreign tenants often sound like a good solution. Once a landlord agrees to rent to one of these prospective tenants, the tenant (aka scammer) sends payment for more than required. They will then ask for the balance to be wired back to them, and make it appear urgent by stating that the funds are needed for tuition, or for a plane ticket to North America. Once the landlord wires back the balance of the payment, the original method of payment will turn out to be fraudulent and the landlord will be out whatever balance they’ve wired abroad.
Real Life Example
One landlord we interviewed, Jennifer, was the unsuspecting victim of one of these scams. Within the first 12 hours after posting 2 rooms for rent online, she received 4 replies from foreign tenants. In Jennifer’s case, phony money transfers from MoneyGram were sent by the fraudsters, and they then asked her to wire the balance of the funds to their travel agent in the US. Upon uncovering the fraud, Jennifer contacted the FBI and FDIC, but was unable to get the help she was looking for. Unfortunately, in cases like these, it is every man (or woman) for themselves.
Scam Avoidance Tips
With a good understanding of the basics on how these scams are operated, you can identify and avoid these people. It takes just a little extra effort to identify a scam, but here are some tips to steer clear of disaster:
- Never wire money. A request to wire funds for a rental is an almost sure sign of a scam. There’s never a good reason to wire money to pay a first and last month’s rent or security deposit. Wiring money is like sending cash – once you send it, you have no way to get it back.
- Don’t deal with either overseas tenants or landlords. For landlords considering an overseas tenant, it is best to proceed with caution. As a tenant where the landlord is overseas but has a plan to get the keys into your hands, be wary. If you can’t meet in person, tour the apartment, or sign a lease before any payments are made, keep looking.
- Never pay anything before you’ve met or signed a lease Don’t send money to someone you’ve never met for an apartment you’ve never seen.
- Do not let someone pay you more than the required amount. Many scams involve overpayment, and by not accepting overpayment in the first place, you will have less to worry about.
- Do nothing until payment has cleared at the bank. If you must accept payment which requires a clearing period, be sure to wait for that item to clear before moving forward.
- Do not give in to pressure. Most scams depend on pressure tactics to get your money before you uncover the deception. Be on high alert when being pressured to act quickly.
When it comes to online rental scams, keep in mind the age old adage of "if it seems too good to be true, it probably is."
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