Snappt Releases Top Twenty US Metropolitan Areas for Application FraudAugust 23, 2023
Los Angeles, CA — Oct. 11th, 2022 – Snappt, the leader in application fraud detection for residential apartment property managers, today announced the “Treacherous Twenty,” the list of the top twenty cities in America for application fraud. This phenomenon exploded during the pandemic and involves creating and submitting fake paystubs and bank statements when qualifying to lease apartments. This practice has become endemic, as nationwide, one in eight applicants submit fraudulently altered financial documentation. Fraudsters submitted more than ten million fake financial documents last year. In Atlanta, property managers see fake paystubs or bank statements for every 5th or 6th applicant.
Snappt has scanned more than 1.5 million pay stubs and bank statements and compiled a list to alert property managers to where the biggest risks lie.
“Application fraud is prevalent throughout the country, even for those cities not listed in the Treacherous Twenty,” said Daniel Berlind, CEO of Snappt. “The average application fraud rate for major metro areas that didn’t make the list was 3.6%, and with the high cost of eviction, that is still the single highest cost property managers face.”
Studies show one in four evictions start with application fraud and eviction rates ran as high as 1 in 9 in the Snappt Treacherous Twenty. The average eviction rate was 4.83%, nearly double the national average of 2.6%. According to the 2022 State of Apartment Tenant Screening Survey, the average cost of an eviction cost property owners more than $7,500 – not including the costs of staff hours, legal fees, or damage to inflicted properties. As a result, the price of renting to a bad tenant can quickly add up since property managers are not just losing income from the rent. These additional expenses are not always considered, leaving profits at risk and managing a profitable portfolio challenging.
Drivers of Application Fraud
Rent increases and unemployment seem to be key drivers among the Snappt Treacherous Twenty.
- Increasing rent. Higher rents make it more challenging to qualify. This in turn causes more potential tenants to resort to application fraud. Snappt is seeing annual rent increases as high as 29.5% in their list (Tampa/ St. Petersburg). Nearly half showed double-digit rent increases in 2022. With the steadily climbing price point of apartments, low prices seem to be a thing of the past for a while.
- Unemployment. Unemployment makes it impossible to qualify for an apartment. This drives applicants to fraudulently alter bank statements and paystubs. Unemployment rates were as high as 5.7% on Snappt’s list, well above the national average of 3.8%. In fact, half of the metro areas on the Snappt list have unemployment rates at or above the national average.
Snappt, a Los Angeles-based real estate technology company, provides a quick and inexpensive data-driven fraud detection service that can accurately spot fraudulent documentation. Snappt is used by 8 of the top 10 property management firms in the U.S. For more information, visit snappt.com