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Rental scams are an all too common occurrence, costing would-be renters an estimated $12.5 billion in 2024 alone. In today’s competitive rental market, prospective tenants can be eager to sign a lease and may ignore warning signs. While scams take many different forms, any of them aim to deprive innocent victims of their money.[1]
If you’re in the market for a new place to live, learn how to spot the signs of a rental scam.
Key Points
- Verify the property’s existence and ownership through online research and public records.
- Be cautious of listings that seem too good to be true, especially with unusually low rent.
- Avoid payment methods that are unconventional or request immediate payment.
- Ensure a thorough screening process, including credit and background checks.
- Document all communications and interactions with the landlord or agent.
Common Types of Rental Scams
Rental fraud can be hard to spot as common scams may use sophisticated approaches to target their victims. The people behind the scam count on renters not catching on until it’s too late and their money is gone. They also leverage the fact that the housing market can be highly competitive and many people rely on technology (such as video tours) to review options vs. turning up in person.
Here are some of the most common rental scams making the rounds. It’s worth knowing that while these scams occur on year-round leases, many are also perpetrated on short-term rentals, such as those for vacation homes or off-campus student housing.
The “Phantom” Rental: Fake Listings
Phantom rentals involve a property that doesn’t actually exist. Fake listings can look like the real thing, complete with photos and detailed descriptions of the property. As convincing as these listings may look, the property is actually made up.
This type of scam works by encouraging people to rent the property without seeing it in person. Scammers may offer excuses as to why they can’t show it to you (say, business travel or a family medical emergency), or pressure you to pay the deposit and first month’s rent to get the keys. Once you hand over the money, the scammer disappears.[2]
The “Hijacked” Ad: Real Listings, Fake Contact
Some scammers commit rental fraud using real listings for homes, apartments, or other properties.
They’ll find a property that looks promising, copy the photos and descriptions, and use them to create a new listing. You contact the number in the listing expecting to talk to a legitimate rental agent, but you’re really talking to the scammer. Based on images and videos, you pay a deposit in good faith to the scammer, who pockets your money.[2]
The “Bait and Switch”: Property Isn’t as Advertised
Bait and switch is a deceptive marketing tactic in which one thing is advertised but something entirely different is delivered.[3]
With these types of rental scams, you may be wowed by photos of the property or a detailed description. You go to check it out, or even sign a lease sight unseen, only to find out that what you’re paying for and what you expected to get are two different things. The actual property doesn’t match with what you believed you were renting.
The “Payment Redirect”: Impersonating a Landlord
Some scammers will go as far as pretending to be the property’s owner to deceive people into signing fraudulent rental agreements. They may even be able to clone the landlord’s email address or payment portal to cheat people out of their money.
The most persuasive scammers convince their victims to send payment for a deposit or rent to them, without verifying that they are who they say they are. Payment redirect scams may involve multiple people working together to facilitate fraud.[4]
How to Spot a Potential Rental Scam (Red Flags)
Some rental scams may be more obvious than others. If you want to know how to avoid rental scams, you first need to know how to recognize them. Here are some of the biggest red flags to watch out for.
The Listing Is “Too Good to Be True”
You may have a checklist of must-have and nice-to-have features that you’re looking for in a rental. If you find a listing that seems to have it all, including lower than expected rent and deposit requirements, that could hint at a scam, especially in today’s tight rental market.
Here’s a simple way to evaluate a seemingly perfect property: Compare it to similar rentals in the same market. Rental listings for a specific area often have similarities in terms of their size, features, and price. You might think you’ve hit the jackpot if you find the one outlier that surpasses the competition in every way but you may be walking into a scam.
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Communication and Pressure Tactics
Scammers may want to close a deal with you quickly so that you don’t have a chance to spot their rental fraud. That’s where high-pressure tactics come in.
For example, the person posing as a landlord or rental agent may bombard you with calls, emails, or texts telling you that you need to jump on the property before they hand it over to someone else. Or, they may offer you a special “discount” to motivate you to hand over a deposit and first month’s rent.
If a rental situation makes you feel uncomfortable, don’t be afraid to walk away. You could be saving yourself the headache of cleaning up the mess from a scam.
Suspicious Payment Requests
Typically when you rent a place, the property owner or rental manager will ask you to pay by check, credit card, or debit card. Scammers, however, may ask for more unusual forms of payment, including:
- CashApp, PayPal, or Venmo
- Cash
They may also pressure you into paying upfront before you sign a lease or even see the property. Or scammers may tell you there are added fees you’ll need to pay on top of your deposit.
Lack of a Proper Screening Process
Legitimate rental agreements usually require some prescreening before you can be approved. For example, you may need to undergo a credit check or a criminal background check. You might also need to provide references from previous landlords or people you know professionally.
Lack of screening is often a giveaway that a rental opportunity is a scam. Any reputable property owner or rental agent will want to know a little bit about the person they plan to rent to.
Recommended: How Much Money Should I Spend on Rent?
Proactive Steps to Avoid Getting Scammed
Knowing how to avoid rental scams is a good thing if you don’t plan to buy a property any time soon. Here’s how to check if a rental property is legit as you look for a place to call home.
Do Your Homework: Verify Everything
A little due diligence can go a long way in avoiding rental scams. Before you hand over money or sign a lease, take time to confirm that everything is as it should be.
- Search the rental listing address online to find out if it’s listed on multiple sites, and compare the contact information and details.
- Use a reverse image search to confirm that the images match the rental property address.
- Ask the rental agent or property owner for proof of ID, including photo identification that lists their name and address.
- Create a paper trail, either via email or text, documenting the conversations you have with the property owner or agent.
Asking questions can help you root out a potential scam. If the person you plan to rent from is hesitant to answer your questions, ignores them, or gets angry with you, that could signal that you’re dealing with a scammer.
The In-Person or Live Video Tour
Seeing a rental in person can clue you in to a scam if the property doesn’t match the photos or description listed online. It’s also a chance to decide if the place fits your needs, and get a feel for the neighborhood.
Ask for a live video tour if a property owner or rental agent is reluctant to let you visit or your schedule doesn’t allow you time to visit. If that request is also turned down, then you may be dealing with a scammer.
Research the Landlord and Property Ownership
If you’re worried about imposter scams, do your research on the property and its owner or owners. For instance, you should know whether you’re dealing with an individual owner, or a rental property company. Here are some other tips for researching ownership.
- Review public property tax records to find the name of the individual or company who owns it. If you’re renting with a government subsidy, ask your local housing authority to confirm who owns the property.
- Check for tax and court records for outstanding liens or mortgage foreclosure proceedings against the property.
- Ask the property owner or rental agent if you can see their photo ID to confirm their name and address.
- Search for the property owner’s name, followed by words like “scam,” “complaint,” or “fraud” to see if any results turn up.
If people in the neighborhood seem willing to chat, ask them what they know about the property and its owner(s). People who live in the area may be the best source of information about what a rental is like and whether it’s legitimate.
The Lease Agreement and Secure Payments
At this stage, you may be ready to sign a lease and pay your deposit if everything else checks out. Before you do, take care of these steps.
- Insist on using a secure form of payment that’s traceable, such as a certified check, cashier’s check, money order, or credit card vs., say, a standard check that draws funds from your checking account. Once a check is cashed, it’s unlikely you’ll be able to get your money back if you’ve been scammed. Similarly, be especially wary of requests for wire transfers, since once the mean leaves your account it’s exceptionally difficult to get it back.
- Familiarize yourself with tenants rights in your state and what rights and responsibilities you have.
- If possible, have a trusted attorney review the rental agreement and any other documents the rental agent or property owner gives you before you sign.
Be prepared to walk away from any rental situation that doesn’t feel right.
What to Do If You Suspect or Become a Victim of a Rental Scam
You can do all the right things and still run into a rental scam; sometimes, scammers are just that good. If you think you’ve been scammed or suspect that a scam is afoot, here’s what you can do next.
Immediate Actions to Take
Protecting yourself quickly matters if you believe you’re a victim of rental fraud. Here are some important first steps to take.
- Contact the financial institution or service you used to pay the scammer. Let them know you suspect a scam, and ask if it’s possible to halt the payment.
- If you paid with a debit card or credit card, consider freezing the card so the scammer doesn’t have ongoing access to your accounts.
- Document the specifics of the scam, including all information you have about the suspected scammer and the property, as well as dates and times of contact and payments.
- Organize a paper trail showing all these details of what you paid, the date of the payment, the payment method, and the agreement you made with the scammer.[5]
The goal is to try to minimize the damage as much as possible. If you gave the scammer your Social Security number, you may also want to freeze your credit reports. Freezing your credit prevents anyone from opening new loans or credit cards in your name.[6]
Reporting the Scam
Reporting rental scams can protect you financially and potentially help others avoid becoming victims. You can report rental fraud or gain important information from these agencies:
- Federal Trade Commission (FTC)
- Consumer Financial Protection Bureau (CFPB)
- Department of Housing and Urban Development (HUD) for scams involving government-subsidized housing and/or your local public housing authority (for scams involving government-subsidized housing)
- Your state attorney general’s office
- Local police
Document each report you make. If there’s any chance of a scammer using your personal information to commit additional fraud, your evidence can help you to defend yourself against collection claims or lawsuits related to identity theft.
Monitor Your Accounts
It’s always a good idea to track your financial accounts for suspicious activity but especially so if you’ve encountered a rental scammer. You can set up alerts for your checking accounts, savings accounts, and credit cards to notify you of new transactions, including purchases, transfers, or withdrawals.
You could also take the additional step of closing your existing bank accounts and opening new ones. You financial institution can likely help you achieve a secure banking experience if you’re in the challenging situation of enduring a rental scam.
The Takeaway
In today’s often highly competitive rental market, scammers may try to take advantage of people with fake listings, impersonation of landlords, and other fraudulent activities. It’s important to protect yourself by being aware of these ploys and proceeding carefully to verify listings and lease opportunities and use secure payment methods when drawing upon your checking account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What is the single biggest red flag for a rental scam?
If a rental listing seems too good to be true, that’s often an indication that you’re dealing with a scam. If a property seems unbelievably affordable, that’s often a clue that it’s not legit. Another common sign of a scam is being subjected to high-pressure sales tactics, such as signing a lease and sending payment ASAP, before you’ve done your due diligence.
Are listings on major sites like Zillow or Apartments.com automatically safe?
While major rental listing sites typically have state-of-the-art security features, there are indeed plenty of scammers out there trying to post fake listings, hoping to trick people into paying deposits or other fees. For this reason, it’s always wise to be alert to red flags and learn how to check if a rental property is legit.
Is it normal to pay a rental application fee?
Rental companies and property owners may collect a rental application fee to cover the cost of a credit check or background check. If you’re asked for a fee, get an explanation (preferably in writing) of what it’s for. Beware of fees that seem unusually large or that the rental agent demands you pay, especially via a person-to-person payment app.
What should I do if I live out of state and can’t see the apartment in person?
If you can’t get to a rental in person for a tour, you could ask for a live video tour of the property. Alternatively, you may ask someone you know and trust who lives in the area to visit the property on your behalf. You’ll need to get the property owner or rental agent’s consent for that first.
How can I quickly verify the person I’m talking to is the real owner?
The best way to quickly verify someone’s identity is to meet them in person to discuss a rental property and ask for a government-issued photo ID. Take down their information then compare that to property tax records which can be found online for the property in question.
Article Sources
- Federal Trade Commission (FTC). Protect yourself (and your money) from scammers this Financial Literacy Month.
- Federal Trade Commission (FTC). Rental Listing Scams.
- Cornell Law School. Bait and switch.
- Office of Inspector General. OIG Fraud Bulletin.
- Federal Trade Commission (FTC). If You Were Scammed.
- Consumer Financial Protection Bureau. What does it mean to put a security freeze on my credit report?.
About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
Photo credit: iStock/atakan
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