How to Report Identity Fraud

Imagine renting your property out to what seems like an ideal tenant. They have decent, stable income, impeccable credit history, and are eager to move in. Everything checks out on paper, and you’re relieved to have found a trustworthy candidate. 

Fast-forward a few months later, and there are no issues. However, suddenly, the rent stops coming in and phone calls and texts go unanswered. The renter has essentially disappeared. And when you show up to check on the property, it’s been damaged beyond the point of recognition – no trace of them.

You start investigating and quickly realize that the ID they provided was fake. In fact, their name doesn’t even exist. And the credit report they submitted was fabricated. So, now you’re stuck with the aftermath, which will include months of lost rent, major property damage, and a long, complex eviction process for an individual who doesn’t even legally exist. In the meantime, bills continue to pile up, and potential legal action seems like it would literally be chasing a ghost.

Fraudulent tenants can cause significant financial and legal issues, leaving property managers and landlords scrambling to recoup losses and repair damages. This post highlights why promptly addressing and reporting identity fraud is crucial to protecting your rental properties and maintaining a safe, secure rental business. 

Importance of addressing and reporting identity fraud promptly

Identity fraud can lead to unpaid rent, property damage, and expensive evictions. And the longer a fraudulent renter lives in your property, the more your financial losses can skyrocket.

Leasing a property to someone under a false identity can unintentionally lead to local or federal housing regulation breaches. For example, you might inadvertently violate fair housing laws or harbor a renter with a criminal record, which could affect the safety of other tenants and lead to legal consequences. 

In addition, fraudulent tenants may neglect your rental unit, use it for illegal activities, or leave behind considerable damage. Also, if your reputation as a landlord suffers due to housing fraudsters, it can deter potential quality tenants from renting from you. 

Initial Steps to Take When Identity Fraud is Suspected

Here are some initial steps to take if you suspect identity fraud:

Keep a detailed record of all interactions, documents, and communications. If identity fraud is detected, these records are critical to file reports with the authorities and present your case should you be required to go to court.

Notify the local police or FBI. Give them all relevant documentation, including the renter’s application, ID, and other evidence of fraud.

Report the fraud to the credit bureau that provided the report. If you received a credit report from a bureau like Equifax, Experian, or TransUnion during the screening process, report the fraud to that bureau to prevent further fraudulent activities linked to the individual’s identity.

Start eviction proceedings immediately. Check with a legal professional to ensure you follow the right steps. Because the renter has likely used a false identity, you may need to speed up the process to stop additional losses.

File an Insurance Claim. If you have landlord insurance, reach out to your provider to see if your policy covers losses related to identity fraud. This is especially crucial for property damage or unpaid rent.

Reporting Identity Fraud

Step 1: Internal Reporting

Before you contact outside authorities, it’s crucial to act within your business. If you are a property management company, for example, or have a team overseeing your properties, notify them immediately.

Next, every detail of the identity fraud must be recorded, including all communications with the renter, copies of their submitted IDs, application forms, and any suspicious activity. Keep in mind that this documentation is critical for internal purposes and if you need to report the incident to law enforcement.

Step 2: Reporting to Local Authorities

Call your local police department and explain that you are a landlord dealing with identity fraud. Be clear that the renter provided fake or stolen identity information and highlight any related activities, including unpaid rent or property damage. It’s important to ask for a police report or case number before you end the call, as it will be helpful for any future legal proceedings or insurance claims. 

Remember: the more evidence you can present, the easier for the authorities to investigate the case and take action. Depending on the severity of the fraud, the police may conduct a formal investigation and potentially pursue criminal charges if the tenant is found guilty of identity theft. 

Step 3: Reporting to Federal Agencies

In addition to reporting the case to local law enforcement, it’s vital to report identity fraud to federal agencies – they track identity theft on a larger scale and can offer additional support and resources. Here are some resources: 

Federal Trade Commission (FTC). To report fraud, visit their website and file a report through IdentityTheft.gov.

Identity Theft Resource Center (ITRC). The ITRC helps victims and landlords understand what steps to take next. You can contact them via their website or by calling their toll-free number.

Additional Resources for Federal Reporting. You may want to notify the Social Security Administration (SSA) if a Social Security number was involved in the fraud. They can help track stolen identities and prevent additional misuse. And if the identity fraud involves financial crimes, you can report the case to the U.S. Postal Inspection Service or the Federal Bureau of Investigation (FBI), especially if the renter mailed sensitive documents or funds fraudulently.

Communicating with the Applicant

Communicating with the applicant requires a careful, professional approach that balances directness with discretion when dealing with tenant identity fraud.

Here are some tips on how to handle this scenario with tact and professionalism:

Draft and document all conversations in writing, via email, or certified letter. This provides precise documentation and minimizes the risk of miscommunication. Be specific about the issues without directly pointing the finger. Focus on discrepancies or missing information. And always offer the potential tenant a chance to explain the inconsistencies – sometimes errors occur without fraudulent intent.

Understand the laws regarding tenant fraud in your area. You might be required to report identity fraud to law enforcement, or you may need to follow specific steps in rejecting a rental application based on fraud.

If it’s confirmed identity fraud, consider reporting the applicant to law enforcement or the FTC. This can help other property managers, landlords, and businesses.

Preventative Measures for the Future

Preventing identity fraud is critical to protecting your investment and ensuring you rent your property to trustworthy people. Here are some things to consider when thinking about identity fraud and the future:

Enhance your tenant screening process. Request government-issued IDs – think driver’s license, passport, etc. – and ensure they match other documentation, such as pay stubs and utility bills. Check that the person’s name and address match across all documents. Run credit and background checks. Verify employment and previous rental history directly by calling listed employers and previous landlords. Beware of applicants who avoid or delay providing contact information. Always cross-check information. 

Implement advanced identification verification tools. With technology advancements, you can access robust tools to help verify a potential tenant’s identity. They provide an extra layer of protection and help flag fraudulent applications before they become an issue. Here are some tools we suggest:

• ID scanning and verification software
• Social security number validation
• Biometric authentication
• Bank account verification

Educate your team on recognizing and preventing identity fraud. Even if you have the best tools in place, you must prioritize human vigilance. Ensuring you and your team are well-informed in spotting the signs of identity fraud can prevent swindlers from slipping through the cracks. Teach your team common red flags, train them to examine documents closely and teach them how to utilize identity verification tools effectively.

Legal and Ethical Considerations

When fraud is suspected or confirmed, it’s critical to handle the situation professionally, taking into account both legal and ethical considerations.

Understanding fair housing laws and regulations is incredibly important. The Fair Housing Act (FHA) protects applicants from discrimination based on race, color, national origin, religion, sex, disability, and familial status.

Landlords must realize that any missteps in the fraud reporting process can often be misconstrued as discriminatory actions if they are not careful. Use consistency for all applicants during the screening process, avoid bias and keep detailed records that track all the steps taken to avoid costly lawsuits or accusations of discriminatory practices.

Even though fraud prevention is essential, respecting applicant privacy rights is crucial. You can balance this by ensuring that any sensitive data you collect is stored securely and used only for screening purposes. It’s also wise to familiarize yourself with data privacy laws that apply to tenant information, such as the Fair Credit Reporting Act (FCRA).

Lastly, always consult with legal counsel when necessary. This approach can help ensure you follow the right steps while protecting yourself from potential liability. Tenant fraud cases can become legally complex, especially if the fraudulent renter challenges the claim or if fair housing concerns arise.

Don’t Wait Until It’s Too Late

Identity fraud can be a significant risk to property managers and landlords. However, with attentiveness and the right procedures in place, it can be avoided or addressed before it causes harm.

By proactively screening tenants, looking for red flags and acting right away when you detect fraud, you can protect your rental properties, financial investments, and legal standing. Don’t wait until it’s too late—take the necessary steps to safeguard your business today.