Housing rental scams are an increasingly serious issue in the real estate industry, costing landlords millions in lost rent, property damage, and legal fees. A new and sophisticated scam has emerged, where the person who qualifies for a rental property isn’t the one who moves in. Often, landlords only realize they’ve been scammed after a month, typically when the rent is unpaid and red flags become apparent.
Over the past few months, Squatter Squad has received a surge of inquiries regarding this bait-and-switch move-in scam, very often involving the Zillow rental application platform. We have handled cases statewide in California, and while these cases pose unique challenges, we’ve worked tirelessly to combat this troubling trend.
How the Scam Works
1. Fake Applicants with Questionable Qualifications
The scam usually begins with an individual or even a fake Limited Liability Company (LLC) applying for a rental. On paper, these applicants seem qualified, meeting the income and credit requirements set by Zillow. However, issues arise from a lack of rigorous vetting procedures, allowing these scams to slip through undetected.
2. The Bait-and-Switch Move-In
Once they pass the application, a different individual or group moves in—without the landlord’s knowledge. These unauthorized occupants often bring pets or engage in lease-prohibited activities, displaying a blatant disregard for property rules. The scam’s orchestrator arranges for families or individuals to move in at low rates, advising them on loopholes to exploit the system. California’s strict tenant laws mean eviction can take months, adding to landlords’ frustrations and losses.
3. Payment Disputes and Unpaid Rent
In some cases, the scammer makes an initial payment that bounces later or only pays the first month’s rent before ceasing all payments. Initially, landlords may assume it’s a simple delay, but the lack of response over time signals a larger issue.
4. Organized Scammer Networks
Investigations show that these scams often involve organized groups. Some scammers take on multiple rentals to facilitate unauthorized occupancy, with one notable case linking a scammer to over 60 rental properties. Using a clean background, they secure rentals, passing them to accomplices who occupy the space.
Why This Scam Is Increasing
1. Increased Rental Demand and Competition
With a competitive rental market, scammers exploit the desperation of tenants eager to secure housing. Knowing landlords are keen to rent quickly, scammers use this urgency to bypass scrutiny.
2. Inadequate Verification Procedures
Landlords, especially independent property managers, may skip essential verification steps. Without confirming who is actually moving in, they assume the applicant is trustworthy, only to later find unauthorized occupants in their property.
Common Red Flags Landlords Should Watch For
Requests for Privacy
Scammers might request privacy for “sensitive reasons,” such as family issues. While not always a red flag, combined with other indicators, it warrants closer attention.
Vague Communication or Last-Minute Changes
Last-minute changes about who will move in should be a red flag. Landlords should be cautious if the occupants are not clearly specified from the start.
Large or Organized Groups
Some scams involve groups with different people playing specific roles, from the applicant to the unauthorized occupant. This coordinated approach is often challenging to trace.
Preventive Tips to Avoid Rental Scams
1. Conduct Thorough Identity Verification
Verify the identities of all occupants with in-person meetings and ID checks. Ensure the person signing the lease matches the individual moving in.
2. Implement Strict Payment Verification
Require electronic or cashier’s checks for the initial payment to confirm funds before occupancy. This can help avoid payment-related fraud.
3. Conduct Routine Check-Ins
Regular check-ins during the first few months can confirm tenant details and help you build rapport, making it easier to detect any discrepancies.
By staying vigilant and implementing these strategies, landlords can better protect themselves against bait-and-switch move-in rental scams, safeguarding their investments and maintaining a secure rental environment. Squatter Squad remains dedicated to supporting landlords in combating these scams, and we’re here to provide expert guidance and action when needed.