Renters: Beware These 4 Common Scams
For phantom rentals, business is booming
Rachel Marie Smith, 31, used Craigslist to advertise her apartment on California Street in San Francisco and offered tours to prospective tenants eager to make the city their home. She ended up pocketing the security deposits and the first month’s rent from 18 unsuspecting applicants, with no intention of renting the apartment to any of them. By the time she vanished with the money, she had relieved her victims of a total of $110,000, even though she herself was only a tenant and had no right to offer the apartment to anyone.
Smith was caught, pled guilty to three counts of grand theft and sentenced to two years in prison in 2011, but her scam is by no means unique. If you're looking to rent a home or apartment in the near future, here are some of the most brazen rental scams to beware.
The foreclosure rental scam. The surge in foreclosures during the recession created a new opportunity for a swindle that shows no signs of abating. With a ready supply of vacant homes in many areas, scammers break into them and change the locks, show them to potential renters and collect first month's rent and security deposit before hightailing it out of town.
Related: Landlords: 4 Rental Scams to Avoid
Some con artists even rent bank-owned homes that are for sale online. This happened to Vance Pritchett, a 27-year-old tattoo artist who found a great deal on a house on Craigslist in Inglewood, California. He and his friends paid the first month’s rent in cash and were busy fixing it up when real estate employee Ted Brass showed up and told them they had to leave, according to American Public Media. The house wasn’t actually for rent. (This story had a happy ending: Brass was so impressed by the calm way Pritchett reacted that he ended up hiring him as a home inspector.)
In some instances, fraudsters even collect rent for foreclosed homes for months until the renters are discovered by the bank or its agents (the scammers are careful to collect the rent in cash and in person, so the money is harder to trace.)
The phantom rental scam. This involves an ad for a rental at a great price and wonderful amenities — for a property that doesn’t exist. Hong L., a Chinese student who enrolled in a summer session at the University of California at Berkeley in 2013, wired rental money and a security deposit from China to someone he thought was a Berkeley landlord so the student would have a room ready when he arrived. To his dismay, the property did not exist, and the driver’s license she had sent him via email turned out to be fake. “I am so sad and embarrassed,” he said. “I wrote her a nice email to ask for my money back, but she did not reply and I saw she is a cheater.”
The "hijacked ad" rental scam. Why do these fake ads seem so real? Because they are — except for the contact email. Con artists often copy ads from legitimate listings on websites, including photographs, but substitute their own email address. They then try to get money from renters without showing the property.
The eviction prevention scam. This scam involves sending letters to tenants living in properties that a bank has foreclosed on with a promise that they can continue to rent the property, if the tenants pony up between $800 and $3,000 for eviction prevention services, according to MSN Real Estate. Unfortunately, the legal services sending these letters are fake, and all they do is fill out a form for the tenants that claims their right to stay in the property for at least 90 days, as the law already permits. The tenant could fill the form out themselves for free.
Red flags for renters
“Anytime you are looking for a rental there’s always a possibility a scammer is behind it,” said Jennifer Abel, a reporter for Consumer Affairs, a consumer advocacy and news website. “If he asks for cash, payment as a wire transfer or prepaid card — anything where he demands money before you meet him or see the house, that’s a definite sign” of fraud.
Being told to wire money is at the top of the list, according to the Federal Trade Commission. “This is the surest sign of a scam,” warns the FTC in a consumer information guide on rental scams. “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 [the landlords] send you a contract first. Wiring money is the same as sending cash — once you send it, you have no way to get it back.”
The FTC and other consumer advocacy groups offer these additional tips.
- Avoid someone who asks for a security deposit or first month’s rent before you meet or sign a lease. Do an online search on the owner and listing. If the same ad shows up under a different name, it’s likely a scam.
- Don’t deal with a landlord who says he is out of the country but has a plan to get you a key. FTC officials say if you can’t meet in person, see the apartment or sign a lease before paying, keep looking.
- Never rent a property without seeing it first.
- Check rental rates in the area. Properties being offered far below the market price can indicate a scam.
- When renting, beware of a house that has a “For Sale” sign rather than a “For Rent” sign. Be doubly suspicious if the lock box is broken and the “agent” uses his own key to let you in.
- Verify identities. Ask the real estate agent to show you his ID, and call the real estate agency later to make sure he works there. Use the Internet to verify that the owner listed for the property matches the person you are dealing with. (Try sites such as http://www.checkyourlandlord.com.)
Abel says you should never be pressured to provide payment because the landlord says the property is in great demand. “If he tries to press your panic button — 'you’ve got to do this now' — he’s trying to scam you,” she said. “A legitimate landlord with legitimate rentals doesn’t have to pull stunts like that.”
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