$16 Billion Problem: Solutions for Tackling Fraud and Eviction Risk
$16 Billion Problem: Solutions for Tackling Fraud and Eviction Risk
Examining the operational impacts of fraud and emerging tools designed to fight back.
By Andrew Ruhland |
As technology continues to evolve, multifamily operators are embracing forward-thinking solutions that offer significant benefits. Unfortunately, bad actors are growing more sophisticated as well—and that has led to a rise in fraud across the industry.
At the 2025 Apartmentalize session, "$16 Billion Problem: Solutions for Tackling Fraud and Eviction Risk," panelists examined the shifting renter landscape, the operational impacts of fraud and emerging tools designed to fight bac.
A Closer Look at Today’s Renter Landscape
According to session data, between fake pay stubs, stolen IDs and AI scams, 90% of operators have encountered application fraud in the past year. The industry has seen a 40% increase in fraudulent applications, with 6.4% of all applications containing some form of falsified information.
“Stolen IDs and fake paystubs seem to be an ongoing challenge for operators,” said Sina Shekou, CEO at Aptly. “The really bad actors are fabricating IDs entirely, but sometimes it’s more innocuous and maybe an applicant is simply exaggerating their income. Either way, it’s continuing to increase year over year and putting a strain on operations.”
The True Impact of Fraud
While only 6% of renters commit application fraud, the cost of a single bad lease can be upward of $100,000. Fraudulent residents often break leases without notice, leaving operators to chase outstanding debts and absorb legal and operational costs, a scenario that Janine Jovanovic, CEO at LeaseLock, is all too familiar with.
“We’ve provided housing to over 2 million renters deposit-free, and if they run, we’re left to address those balances,” Jovanovic said. “Because of that, we’ve done a lot of research with our claims data to see what’s leading to those outcomes so we can better inform our clients and find the best solutions.”
LeaseLock’s "2024 Industry Risk & Revenue Report" revealed that 23.8% of evictions are directly tied to fraudulent applications. Additionally, 24.5% of bad debt is attributed to renters who misrepresented themselves during the leasing process.
“These situations of fraud happen frequently in our business, and if we don’t stop them before they arrive, they can quickly snowball,” said Trina Wiliams, Vice President of Operations and Performance at Willow Bridge. “There are actually videos that teach people how to ‘beat the system’ and get into a unit. Fraud is costly to the company and our associates. We don’t want to put the burden entirely on team members, but we have to stop it. It hurts both our bottom line and our reputation.”
A Tech-powered Defense Playbook
Despite the growing threat, a 2023 TransUnion Rental Housing Industry Survey found that 33% of operators aren’t using any formal fraud detection tools, and only 25% actively track fraud metrics across their portfolios.
To meet evolving challenges, operators must adopt a layered defense approach and combine the vigilance of onsite teams with the speed and precision of modern technology.
Panelists shared several red flags that can help staff spot a potential fraudster, including an urgency to immediately move in, requests to move-in after hours or paying multiple months of rent upfront. While human observation remains essential, AI-powered tools are dramatically improving detection — reducing evictions and bad debt by up to 51%.
“Fraudsters may be getting more sophisticated but having multiple layers to the application process helps a lot,” said Jeremy Thomason, Managing Principal at Convolo Capital. “We hire third-party property managers that use a variety of tools to mitigate fraud, but one of the most impactful has been the integration of technology that can identify deposit patterns in an applicant's account.”
Thomason emphasized that while AI is a powerful ally, it’s no substitute for the human element.
Looking Forward
With changing legislation, transparency requirements and even bans on credit score usage in some areas, operators face more pressure than ever to safeguard their communities. Smarter technology and well-informed associates offer a path forward where fraud is easier to detect, prevent and respond to.
“Onsite teams are the first line of defense against fraud,” Thomason said. “If you try to remedy the issue only with AI and eliminate the human component, you’re in trouble. Human intelligence and AI have to work together to be effective.”
Andrew Ruhland is an Account Executive and Content Writer for LinnellTaylor Marketing.