Renting a home or apartment can be a stressful process, and unfortunately, rental frauds are becoming more common. Prospective tenants often rush into rental agreements due to competitive markets, only to fall prey to scams that can result in financial loss, identity theft, or even homelessness. Being aware of the most common rental frauds can help tenants avoid these traps and protect themselves.
In this article, we’ll take a detailed look at the various types of rental frauds that tenants should know about, how they operate, and what steps you can take to avoid becoming a victim.
1. Fake listings
What it is:
One of the most common rental frauds involves fake listings. Scammers create rental advertisements for properties that don’t exist or aren’t actually available for rent. They often use images and details from legitimate property listings, making it difficult to distinguish from real ads.
How it works:
Scammers post these fake listings on popular rental websites, social media, or classified ads, often advertising properties at prices below market value to attract more interest. Once the victim expresses interest, the scammer will ask for an upfront payment, usually in the form of a deposit, security payment, or holding fee, before allowing the tenant to see the property. After the payment is made, the scammer disappears.
How to avoid it:
- Always verify the listing through reputable rental platforms or property agents.
- Never send money before viewing the property or signing a rental agreement.
- Be cautious of listings with prices that seem too good to be true.
- Cross-check property information through public records or contact the landlord directly if possible.
2. Phantom rentals
What it is:
Phantom rentals are similar to fake listings but involve properties that exist but are not available for rent. Scammers will advertise a real property that they have no authority to rent out.
How it works:
In this scheme, the scammer might post the address of a vacant home, foreclosed property, or a property listed for sale as available for rent. Interested tenants will be asked for personal information and a deposit, only to find out later that the property is not for rent.
How to avoid it:
- Contact the property owner or management company directly to confirm the rental status.
- Be cautious if the listing agent or landlord cannot meet in person.
- Avoid sending money for properties you haven’t seen.
3. Token Amount Trick
The token amount trick is another popular rental scam where scammers pose as property owners and ask for a small “token amount” to secure the rental or schedule a visit. Typically, these “owners” claim they are out of town and would only make the trip to show the property if the prospective tenant sends a refundable token payment to prove they are serious. However, once the payment is made, the scammer vanishes, and the tenant never sees the property or the money again.
How it works:
The scammer lists a property at an attractive price, making it seem like a good deal in a popular area. They pretend to be owners living in another city, often using a believable excuse like avoiding unnecessary trips for a no-show. They promise the token amount will be refunded or deducted from the rent, convincing the tenant to transfer a small sum. The listing disappears once the payment is made, and further communication with the “owner” stops.
How to avoid it:
- Never pay before seeing the property: Legitimate landlords will not simply demand money to show a property.
- Visit the property first: Always check the place in person before committing financially.
- Watch out for deals that seem too good to be true: Scammers often lure tenants with meagre prices.
- Verify the owner’s identity: Ask for proper identification and cross-check with the apartment’s security or management.
Scams like these often prey on tenants desperate to find a home quickly. Staying cautious and refusing upfront payments can help avoid falling victim to this trick.
4. Bait-and-switch scams
What it is:
Bait-and-switch scams occur when a landlord or agent advertises a property, but after showing interest, you are informed that the property is no longer available. The scammer then offers you a different property, usually in much worse condition or less desirable location.
How it works:
Scammers use this tactic to lure tenants with attractive rental properties at affordable rates, only to push them toward lower-quality alternatives. After the initial “bait” is unavailable, they claim to have another property, but it’s often far below the advertised quality or price. By this point, the tenant may feel pressured to settle for the alternative because of time constraints.
How to avoid it:
- Be wary of landlords or agents who suddenly switch properties after showing you one.
- Always inspect the property before agreeing to anything.
- Avoid rental offers that require fast decisions or pressure you to act quickly.
5. Security deposit fraud
What it is:
Security deposit fraud is when a scammer collects a security deposit from a tenant but never returns it after the lease ends, often citing false damages or refusing to communicate.
How it works:
Unscrupulous or fake landlords will insist on a hefty security deposit and may create unreasonable expectations for returning it. At the end of the lease, they might claim excessive damage to the property or makeup excuses to keep the deposit. In some cases, they may disappear altogether once the lease is over.
How to avoid it:
- Take pictures of the property before and after moving out to document its condition.
- Carefully read the lease terms about the deposit return and note any excessive or unreasonable clauses.
- Research the landlord or property manager’s reputation through reviews or testimonials.
6. Key or lock-out scams
What it is:
This scam happens when a fraudulent landlord or individual changes the locks on the property or withholds keys until you’ve paid additional fees or higher rent than initially agreed.
How it works:
Scammers may initially provide access to the property but demand additional payments before handing over the keys or allowing full access. They could also change the locks without notice, effectively locking you out of the property unless you pay an unexpected fee.
How to avoid it:
- Ensure the rental contract explicitly mentions any key deposits or lock-change policies.
- Work with established and reputable property managers or landlords.
- Be wary of landlords who frequently change the terms of the agreement after you’ve moved in.
7. Overpayment scams
What it is:
In an overpayment scam, a fraudster sends a check or makes a payment for more than the agreed rental amount, only to later request that you refund the difference.
How it works:
Scammers often send checks for the first month’s rent or security deposit, but the check is for more than the agreed amount. They ask you to refund the excess payment via wire transfer or a different method. The original check bounces after you refund the money, leaving you out of pocket for the amount you sent back.
How to avoid it:
- Never accept overpayments for rent or deposits.
- Be cautious of tenants or landlords who make unusual payment requests.
- Wait for all payments to clear before taking any further action.
8. Identity theft scams
What it is:
Some scammers target renters to steal their personal information and use it for identity theft.
How it works:
Tenants are required to submit sensitive personal information such as Social Security numbers, bank statements, and other identification details during the rental process. Fraudsters posing as landlords may ask for these details under the guise of performing background checks, but their real goal is to steal your identity.
How to avoid it:
- Only provide personal information through secure channels and when dealing with verified landlords or agents.
- Be wary of landlords who ask for extensive personal information upfront or before you’ve even seen the property.
- Check the legitimacy of the landlord or property manager before providing sensitive documents.
9. Illegal subletting
What it is:
Illegal subletting occurs when a tenant sublets the property to someone else without the landlord’s consent. The sublet arrangement is often fraudulent, leaving the subtenant with no legal rights to the property.
How it works:
A scammer rents a property and then illegally sublets it to an unsuspecting tenant, collecting rent from the subtenant without the landlord’s knowledge. When the landlord discovers the illegal sublet, the subtenant may be evicted or lose their security deposit, with no legal recourse against the original scammer.
How to avoid it:
- Always check with the landlord or property manager if subletting is allowed.
- Make sure the subletter has legal permission to rent out the space.
- Ask for a copy of the original lease agreement to verify subletting rights.
10. Rent-to-own scams
What it is:
Rent-to-own scams prey on tenants looking to buy a home but may not have the financial means or credit to do so immediately.
How it works:
In a typical rent-to-own scam, the fraudster offers the tenant the opportunity to rent a property with the option to buy it later. The scammer may charge a hefty upfront fee, promising this will count towards future purchases. However, the contract terms are often so unfair that the tenant can never actually buy the home, or the scammer has no intention of selling the property at all.
How to avoid it:
- Have a legal professional review any rent-to-own agreements.
- Avoid deals with excessive upfront fees.
- Verify that the person offering the property is authorised to sell it.
11. Third-party payment scams
What it is:
In this scam, tenants are asked to pay rent through a third-party service or to an individual not listed as the landlord.
How it works:
Scammers may set up fake online payment systems or ask tenants to transfer rent payments to a third-party account. Once the payment is made, the tenant may discover that the person or service they paid has no connection to the property. The landlord will still expect rent to be paid, and the tenant may lose the money they sent to the scammer.
How to avoid it:
- Make rent payments directly to the landlord or property management company.
- Avoid any payment schemes that seem overly complicated or involve unfamiliar third-party services.
- Confirm payment methods with the landlord and ensure they match the lease terms.
12. Fake agent scams
What it is:
Fake agents pose as legitimate real estate agents, collecting fees or deposits from tenants without delivering an actual rental agreement.
How it works:
Scammers create fake profiles on rental websites or classifieds, pretending to be real estate agents representing landlords. They may show the property and even conduct interviews, but after collecting fees for background checks, deposits, or administrative costs, they disappear without providing a lease or property access.
How to avoid it:
- Verify the credentials of any real estate agent you deal with.
- Use only well-known rental platforms and agencies.
- Be wary of agents who demand large fees upfront or pressure you into quick decisions.
13. Lease fraud
What it is:
Lease fraud occurs when a scammer modifies a legitimate lease or fabricates one entirely to deceive tenants.
How it works:
Scammers might present tenants with a lease that includes terms or clauses not agreed upon, such as inflated rent or additional fees. In some cases, they may create an entirely fake lease, collecting rent payments without ever having the legal right to rent the property.
How to avoid it:
- Carefully review any lease before signing.
- Have a lawyer or trusted professional review the lease if unsure about the terms.
- Ensure that all agreed-upon terms are written in the contract.
14. Online rental scams
What it is:
Online rental scams occur through various platforms, such as classified ads, social media, or unverified websites, targeting tenants who are looking for rental properties online.
How it works:
Scammers may create fake profiles or use stolen pictures and details of real properties to lure tenants into paying deposits or providing personal information. These scams often involve promises of great deals or urgent offers that require quick action.
How to avoid it:
- Use only trusted rental websites or apps.
- Avoid deals that require fast decisions or upfront payments.
- Research the landlord or property manager and verify their identity.
How to protect yourself from rental fraud
While rental fraud is prevalent, there are ways to protect yourself from becoming a victim. Here are a few steps you can take to minimise the risk:
- Research the property and landlord: Verify the property ownership and check the landlord or agent’s credentials before signing anything.
- Use secure payment methods: Avoid paying in cash or through wire transfers, and always ensure you are sending money to the rightful party.
- Visit the property in person: Whenever possible, visit the property before committing to a rental. Be cautious of landlords who refuse to show the property or insist on virtual-only tours.
- Get everything in writing: Ensure all agreement terms are clearly outlined in a lease or contract and never rely on verbal agreements.
- Trust your instincts: If something feels off, it probably is. Be cautious of any red flags such as urgency, pressure to pay quickly, or overly generous offers.
Tenants can significantly reduce their chances of falling victim to rental fraud by staying vigilant and taking precautionary measures. Awareness is the key to protecting one’s finances, personal information, and peace of mind during the rental process.
Housing.com POV
Tenants must remain vigilant against the rising tide of scams. Fraudsters are becoming increasingly creative, using convincing stories, fake listings, and urgent demands for payment to deceive prospective renters. While technology has made house hunting more accessible, it has also allowed these scams to thrive. The key to avoiding rental fraud lies in a healthy dose of scepticism, verifying every detail, and never rushing into decisions or payments. Staying informed and cautious can make the difference between securing a home and falling victim to a costly scam.
FAQs
What are the most common types of rental frauds tenants face?
Common rental frauds include fake property listings, upfront payment scams, token amount tricks, identity theft, and counterfeit agents or owners demanding fees for property viewings.
How can I spot a fake rental listing?
Look for red flags such as meagre rent, identical photos on multiple listings, landlords asking for upfront payments before viewing, and unverifiable contact details or property locations.
Should I pay a token amount before viewing a rental property?
No. Legitimate landlords or agents do not require token payments before property viewings. It is likely a scam if someone asks for an advance payment without a visit.
What should I do if I suspect a rental scam?
Immediately stop communication, avoid making payments, and report the scam to the platform where you found the listing. You can also inform local authorities if you’ve lost money.
How can I verify the authenticity of a property or landlord?
To ensure the landlord's legitimacy, visit the property in person, speak with the building staff, and cross-check ownership details with legal documents or the local registry.
