Renters Fear Scams on the Internet
Scams on the internet (especially social media sites) concerning rentals are growing by leaps and bounds, according to Rently, a leading firm in self-touring and smart home technology.
According to the company, the tight rental market serves as an inducement for scammers who play on the frustrations of prospective renters. As a result, renters are beginning to demand that the real estate industry offer more protections against fraud.
Rental scams have spiked in recent years. The Better Business Bureau has reported a 45% spike during the last two years. In 2023, for example, the Federal Trade Commission has opened more than 10,000 rental scam cases.
As demand outpaces supply, tightening the market, fraudsters exploit the situation using fake listings, fabricated identities, and high-pressure sales techniques.
Unfortunately, the more common the scams occur, the more it undermines the credibility of brokers, the vast majority of whom are honest. A climate of suspicion can take hold, where even honest brokers are seen as suspect, which causes suspicion during the whole rental process.
The more pervasive the scams become, the more renters will demand more and improved industry safeguards and new technology to prevent these costly and emotionally draining scams.
“As housing demand surges, scammers are exploiting renters’ desperation with alarming precision,” explained Rently CEO Merrick Lackner. “Beyond the financial loss, these scams create lasting emotional harm, turning what should be an exciting step into a source of stress and heartbreak.”
The Rently study comprised 500 U.S. adults who have rented an apartment, condo, or house during the past five years who have either experienced or are aware of rental fraud.
The key findings are:
- 93% of renters believe that rental scams are common, and 90% are concerned about falling victim themselves.
- Facebook is ground zero for scammers and their victims. A full 88% fell victim on that website. 12% were scammed on Craigslist. Below market prices being offered was one of the biggest lures.
- The thieves cash in fast. Before discovering that they were scammed, 70% of victims had already paid their security deposit, 59% paid their application fee, and 50% had paid their first month’s rent. Losses ranged from $500 to $5,000.
- The frequency of scams is shaking the confidence in the industry. 40% of renters blame renting platforms, 23% blame landlords, 19% said themselves, and 17% said government agencies.
- Renters are demanding more proactive prevention tools from the real estate industry, with 92% saying it’s “very important” or” important.” The respondents stressed the importance of educating the public. The resources and tools renters believe will help them avoid rental scams included a mandatory verification process for all rental listings (73%), community reviews or ratings of landlords and properties (54%), scam detection tools or app integrated into rental platforms (48%), and government hotlines to report or verify suspicious listings (37%).