Most people looking for a place to rent start their search online. Internet listings provide a wealth of information beyond price — pictures, floor plans, amenities, perks and a detailed description of the property.
But many of these listing are bogus, created by scammers who hope to steal thousands of dollars in upfront fees for a place they don’t own or don’t have the right to rent. Some properties may not even be for rent.
A report from the Better Business Bureau (BBB) calls it a “massive” problem, that’s getting worse.
“Millions of listings for apartment, house and vacation rentals are totally fake,” said Steve Baker, BBB international investigations specialist. “So the chances of coming across a scam rental listing are extremely high.”
A survey by Apartment List conducted in 2018 found that:
- 43 percent of those who shopped for an apartment online have encountered a bogus listing.
- 5.2 million people have lost money to rental scams in the U.S.
- Renters between the ages of 19 to 29 are more likely to lose money this way.
Of those who did get fooled, the median loss was $400, the survey found. But 31 percent lost more than $1,000 and nearly 18 percent lost more than $2,000.
A scam that's easy to commit
It doesn’t take much to create a fake rental ad. Fraudsters can copy a legitimate ad — photos and description — and simply swap out their contact information for the real landlord or management company. Most sites use algorithms to spot scam rental listings, but the BBB report says the technology used to screen rental listings “can be evaded or circumvented by smart and determined scammers.”
Phony listings can be anywhere — even on “reputable apartment advertising services,” cautioned Amy Groff, senior vice president of industry operations at the National Apartment Association. “Unfortunately, the scams continue to increase.”
To lure in their victims, the fraudsters often offer a rent that’s well-below market price. When someone responds, they’re pressured to send money right away without even seeing the place.
“Even if you're desperate to get a place to live, don't send your money off first,” cautioned Bridget Small, educational specialist at the Federal Trade Commission (FTC). “When someone is pressuring you to act now, it's never a good thing. You need to take time to check it out.”
The crooks typically want the money sent by wire transfer or gift card, something that can't be traced and can't be reversed. It’s never a good idea to send money to someone you’ve never met in person for an apartment you haven’t seen, the FTC cautions.
A victim shares his story
Lenny, a 27-year-old tech worker in Northern California, was looking to move to San Francisco last August. An ad on Craigslist caught his eye, so he contacted the property manager who gave him more information and a link to the company’s website. Everything seemed legit.
Because housing in San Francisco is tight, Lenny (who asked us not to use his last name) agreed to pay a deposit to hold the apartment until he could see it that weekend.
The company sent him a signed lease and made him this offer: Pay half a month’s rent and security deposit up front — thousands of dollars — and get a 10 percent discount on your rent for 12 months. Sounded like a great deal, so the money was sent and a tour date was set.
The day before the tour date, Lenny got an email saying the company needed to reschedule. A week later, in a second email, the company said the apartment was being pulled off the market.
That’s the last time he heard from the company. His deposit — $2,500 — was not refunded.
After the deal collapsed, Lenny realized the signed lease that looked legitimate was not. The phone number was fake and the real estate license was expired.
“You're trying to move quickly … to make things happen for your family, and so you bypass red flag after red flag after red flag,” Lenny told NBC News BETTER. “But the responsibility was on me to not let that happen.”
Landlords are helpless to stop the scam
NBC News BETTER spoke to the woman who owned the apartment building Lenny thought he was going to move into. Marguerite (who asked that we not use her last name) told us this was not the first time criminals had hijacked her rental ads.
One time, a young couple showed up to see an apartment listed in a bogus ad and she got to see the phony listing.
“It had pictures of my unit and they were mostly my words with the price and a few other things changed,” Marguerite said.
It said the unit could be reserved prior to the open house by paying several months’ rent in advance. Because the price was so low, about half the market rate, the couple decided to visit the property before doing anything. Thankfully, they did.
“This is nasty business,” Marguerite said. “The crooks are affecting my character and my reputation. They’re using my property as bait in their fraud, and I don't know how you stop it.”
How to protect yourself
The FTC has a step-by-step checklist of how to avoid rental scams. Here are a few red flags to watch out for:
- Ridiculously low price: If the rent is well below market rate, especially in a hot market, that’s a warning sign.
- Money upfront: A security deposit or first month’s rent is required before you sign the lease.
- You can’t see the place: If you or someone you trust cannot meet in person with the landlord or agent and see the house or apartment — keep looking.
- You’re told to wire money: The FTC calls this “the surest sign of a scam.” There’s never a good reason to wire money to pay a security deposit, application fee, first month’s rent, or vacation rental fee. That’s true even if you’re sent a contract first. Wiring money is like sending cash — once it’s gone, there’s no way to get it back.
It’s also smart to research the listing and the rental company. If you find the same ad listed under a different name, that’s a clue it may be a scam, the FTC cautions.
For those planning to rent a private home for a vacation getaway, the Motley Fool has tips on how to avoid getting burned.
If you’ve been the victim of a rental scam, file a report with your local police department and file a complaint with the Federal Trade Commission, the FBI’s Internet Crime Complaint Center (IC3) and the BBB’s Scam Tracker.