Most apartment owners and managers know about identity fraud and the impact it can have on their businesses. However, of all the types of identity fraud encountered in the multifamily sector, synthetic fraud is on the rise.
According to a white paper released by the National Apartment Association (NAA), synthetic fraud involves a situation in which all information about an applicant is fabricated, combining real and fake information to create a new identity. The NAA indicated that synthetic fraud is “the fastest-growing, accounting for an estimated 85% of all identity fraud in the country,” the NAA’s Stephanie Anderson wrote.
The difficulty with synthetic fraud is that it’s difficult to identify during the leasing process, because it isn’t immediately reported, as are other types of identity fraud. It’s also easy to perpetrate, given that identities and other information can be purchased through online platforms, such as Craigslist, and then used to apply for loans, credit and other transactions.
In the meantime, the white paper notes that property managers and owners can expect to encounter four basic types of fraud, in addition to synthetic fraud. The other three are:
- First-person fraud. The applicant is acting on behalf of another person when renting an apartment. The applicant uses his/her real identity information on the application, but won’t be the person residing in the apartment.
- Third-party fraud. The applicant assumes a stolen identity, and uses the victim’s personally identifiable information, including name, Social Security number and date of birth.
- Identity manipulation fraud. In this scenario, the applicant alters his/her own identifying information in a way that resembles a typo or spelling error. Examples include a Social Security number that might be off by one number, a slightly different name, or altered birthdate.
The NAA white paper also provides prevention methods when it comes to fraud, including more in-depth screening processes, continuing education as to what fraud looks like, and how apartment owners and managers can use technology to help root out instances of synthetic fraud, as well as other types of identity fraud.