New Yorkers looking for rental homes or apartments in the state are falling prey to rental fraud all too often.
Rental scams are executed by criminals in a variety of ways, but the goals are the same: bilk potential tenants out of as much money as possible.
A common scam involves individuals who “rent” a property that isn’t theirs to one or more potential tenants—sight unseen—making off with security deposits, first month’s rent or prepaid rent.
The scammers take legitimate rental postings and re-post or advertise them with their own contact information, often at enticing, lower rates than the original advertisement. The transactions are generally conducted by phone or email with the scammer asking for a wire transfer, prepaid debit card or method of payment that is not traceable.
Other scams include bait-and-switch techniques where a different property than the one available is advertised; rentals that are listed with features they don’t really have in order to garner higher rent; and charging potential tenants fees for background checks, then stealing the money and disappearing.
The New York State Division of Consumer Protection monitors cases in New York, paying close attention to ones that involve vulnerable consumers, such as immigrants or younger residents new to New York.
“Real estate scammers are taking advantage of vulnerable consumers, particularly immigrants and other first-time residents with false promises of securing rental apartments and illegally charging upfront fees, commissions and deposits,” said New York State Governor Andrew Cuomo in a warning about rental scams back in 2013.
Immigrants may not understand the rental process, have limited housing options, or are wary of background or credit checks.
Younger renters are 42 percent more likely to have lost money from rental scams, according to a July 2018 survey by Rentonomics, a company that provides rental search services. “Millennial renters are generally more tech-savvy than older generations, but despite being familiar with online rental searches, many lack the ability to recognize fraud,” the survey indicated.
In total, an estimated 5.2 million U.S. renters have lost money on rental scams, and far more have encountered scam listings or contacted fraudulent properties during an apartment search, according to Rentonomics.
It is also common for criminals to attempt to dupe tourists seeking vacation rentals in the same manner as rental homes and apartments. In addition, criminals also target real estate agents and people involved in real estate transactions, according to the National Association of Realtors (NAR).
Hackers may send an email that appears to be from an individual legitimately involved in the transaction, informing the recipient, often the buyer, that there has been a last-minute change to the wiring instructions. Following the new instructions, the recipient will wire funds directly to the hacker’s account, never to see the funds again
To avoid becoming the victim of rental or real estate scam, the State’s Division of Consumer Protection suggests the following tips:
- Check if the real estate agent or apartment information vendor is licensed in the State of New York by visiting eAccessNY.
- Under no circumstances should you be required to pay an upfront payment or fee before securing an apartment.
- Non-refundable commission deposits are not permissible. An agent earns a commission when he or she assists the landlord and tenant in reaching an agreement on all of the terms of the apartment rental.
- Commission fees are negotiable. You have the right to negotiate the amount of the commission to be paid to a broker or salesperson. There is no such a thing as a mandatory commission rate.
- Make sure the property you are interested in is legitimately for rent. Many scammers act as representatives of real estate that is not on the market or does not exist.
- Obtain a receipt for any deposit or payment you make. If an agent collects fees that you owe to the landlord, such as a deposit or the first month’s rent, the agent has an obligation to separate that money from his or her own.
- Avoid making payments or deposits with cash. It is always better to leave a paper trail by using a credit card or a personal check. Make sure to save a copy of the payment for your records.
- Ask for copies of all documents: checks, money orders, the application, receipts, the lease and any other document related to your apartment rental and keep them in a secure location in case they are needed to dispute a charge.
No matter what your real estate transaction, remember, if it looks too good to be true, it probably is. If you find that you have fallen for a scam, the Federal Trade Commission suggests contacting the police and reporting the scam to the site where the listing was posted. It should also be reported to the state Division of Consumer Protection at 800-697-1220. A real estate or criminal law attorney may also be of assistance.
Gerald D. Raymond is a Managing Partner in Tully Rinckey PLLC’s Syracuse office, where he is part of the practice on criminal law, civil litigation and real estate law practice groups.