Everything You Need to Know About Identity Fraud

Identity fraud is a serious issue that affects millions of people each year.  It occurs when someone steals personal information, such as social security numbers, credit card numbers, or bank account details, and uses it to open accounts, make purchases, or obtain loans in the victim’s name. This can lead to financial losses, damaged credit scores, and even legal problems for the victim.

In this post, we’ll explore the different types of identity fraud and discuss the various ways to prevent these scams. We’ll then review the prevalence of identity fraud in the multifamily industry and why it’s essential to stay vigilant.

What is identity fraud?

Identity fraud is when someone pretends to be someone they are not. It usually happens when someone steals or forges personal information, such as a social security number, driver’s license, or credit card number, to gain access to financial accounts or other sensitive information. Over 55% of US-based businesses reported receiving fake documents or IDs in 2023, underscoring the severity of this problem.

In the multifamily industry, applicants may use a stolen identity to get past background checks, hide past evictions, and get approved for a property they otherwise would not have.

Different types of identity fraud

There are many different types of identity fraud. Some common examples include:

Credit card fraud

This occurs when someone uses another person’s credit card information without permission. The thief can purchase and rack up debt in the victim’s name.

Tax-related identity theft

This typically happens when someone uses a stolen social security number to file a fraudulent tax return in order to claim a refund.

Medical identity theft

In this type of fraud, someone steals an individual’s personal information to receive medical care on their behalf or use their insurance for unauthorized services.

AI-generated IDs

This is a relatively new tactic where fraudsters use artificial intelligence to quickly create fake identities, making it harder for businesses to detect and prevent fraud.

Synthetic identity theft

Similar to AI-generated IDs, synthetic identity theft involves creating a new identity by combining real and fake information. This type of fraud can go undetected for a long time, as it is difficult to trace back to a single individual.

How does identity fraud happen?

The simplest way for fraudsters to steal an identity is via “shoulder surfing”– watching someone from a nearby location as they enter their credit card number – or by listening in on a conversation when personal information is given over the phone.

Another way is via spam emails. Many people respond to these fake emails that promise them some benefit but require personal information or data to continue. Victims of this type of identity fraud often don’t realize the illegitimacy of these emails until it’s too late.

Recent technological advancements have provided a new way for fraudsters to sneak past the system. AI-generated IDs are on the rise, making it increasingly difficult for leasing teams who rely on older techniques or technologies to tell which IDs are real and which are fake. This new source of fraud poses a potential threat to the security and financial stability of multifamily properties.

Identity fraud vs. identity theft

You may think that identity fraud and identity theft are the same thing. While they both involve the misuse of an identity, one key difference exists.

Identity theft is the act of stealing someone else’s information for your use. Identity fraud, on the other hand, is the USE of that stolen information. For example, when someone uses a stolen credit card to make purchases, this would be considered identity fraud. The initial act of stealing the card would be considered identity theft.

How to prevent identity fraud

Identity fraud can happen to anyone – but that doesn’t mean you can’t take steps to prevent it.

Monitor your accounts: It’s crucial to routinely check your bank statements and transactions to avoid unauthorized charges.

Secure personal information: Keep your Social Security number, date of birth, and other sensitive data private. Be cautious with who you share this information, and make sure to properly dispose of documents containing this information.

Be cautious online: Scammers can easily obtain personal information through phishing scams or by hacking into unsecured websites. Always use caution when entering personal information online, and make sure only to enter it on secure sites.

Sign up for alerts: Many financial institutions will send a text or email when suspicious transactions are made on your accounts. Sign up so that you know when and where your credit cards are used. You can even set an alert for transactions that exceed a specific dollar amount.

Use strong passwords: Create unique passwords for each account that include a mix of letters, numbers, and special characters. Avoid using easily guessable information like birthdays or common words.

Utilize fraud detection software: This is specific to businesses that accept customer information or require an ID. Incorporating fraud detection technology into your existing systems can help catch these fraudsters before it’s too late.

Shred any paper statements or bills: While most opt into online banking, any credit card or bank statements received should be torn up or shredded and tossed. Don’t forget to do this with junk mail, too, particularly preapproved credit offers.

Identity fraud in the multifamily industry

With the advent of new technology that enables the easy creation of fake IDs—some even AI-generated—it’s easier than ever for applicants to sneak through the leasing process. Applicants utilize these fake identities or stolen personal information to secure leases, bypassing background checks and credit screenings. The consequences can be severe, leading to financial losses, increased security risks, and unsafe communities.

Property managers can minimize these risks by establishing strong verification protocols. Implementing robust ID verification is the key to protecting your properties and ensuring applicants are who they claim to be.

Remember, not every ID verification offering is equal. Look for services that include biometric technology and front and back checks on an ID. At Snappt, we offer a comprehensive ID verification service that includes those features, as well as 30+ other ID checks and the ability to scan 4,600 global IDs.

Lastly, don’t forget to train your team on the signs and dangers of ID fraud. While ID verification is the best way to stop fraud at the door, keeping your team informed can also help prevent potential fraudulent activity and help them stay vigilant.