TransUnion’s powerful ResidentID® analysis points to a growing number of fraud red flags
Red flags that could signify fraudulent activity among applicants in rental housing are on the rise, according to a new fraud analysis from TransUnion (NYSE: TRU). Since the start of the pandemic, the percentage of fraud triggers detected through TransUnion’s multi-layered rental housing fraud solution, ResidentID, increased nearly 30% from the period of March 2020 to August 2020.
Fraud triggers, defined as applicant statuses with failed authentication and/or identified as high risk, reached a high of 15.2% in August 2020, compared to 10.3% over the same period last year. Over the course of the pandemic, this rise in fraud triggers has not only left an impact on the rental industry, it has also placed multifamily executives on high alert for fraudsters.
ResidentID Detects Increase of Fraud Triggers During the Pandemic:
To gain a greater understanding of the impact fraud has had on the multifamily rental housing industry, TransUnion conducted a survey of 82 multifamily executives in September 2020 to explore how they are managing fraud challenges in this changing environment.
The survey found that since the pandemic began, the frequency of fraud incidents have increased for 48% of respondents with another 26% experiencing up to 100 instances of fraud in their portfolio in the past year. While many of these organizations were able to flag fraudsters prior to move-in, 41% of respondents stated they did not identify the fraud until after the applicant moved-in – resulting in a negative impact to the organization’s bottom line. The recent volatility in the market led two in three executives (67%) to say they are concerned about future fraud growth within their communities.
Customer Case Study Shows the Value of Early Fraud Detection
The increase of fraud presents challenges from both an operational and fiduciary perspective for the multifamily industry. However, a recent case study with Bridge Investment Group, a national owner and operator for both large and small real estate investors, found that early fraud detection can offer a significant value proposition for operators.
The case study found that within a 12-month period, 16% of more than 7,000 renter applications triggered a red flag for potential fraud. Of these flagged applicants 10% were unable to correctly answer personal identification information questions (or one-time passcodes), and another 6% were flagged as unable to be verified.
The presence of these early fraud detection measures prompted additional identity verifications – causing fraudulent applicants to abandon the application process. As a result, Bridge yielded nearly $1.1 million in fraud related savings.
Additional findings from the Bridge Investment Group Case Study can be found here. For more information on the benefits of powerful identity verification solutions, please visit: https://www.transunion.com/product/residentid.
Source: TransUnion Press Release