100 Launches Anti-Fraud Initiative
Founding members include national-scale multifamily owners and operators, as well as an identity verification technology company.
Multifamily software platform 100 has launched 100x, an initiative whose goal is to inform the industry about fraud directed at landlords, and encourage stakeholders to take further steps to fight it. Participants in the initiative include identity verification and fintech executives, as well as multifamily operators and owners.
In a statement, 100 listed identity verification specialist CLEAR as a founding member, along with executives such as Pauline Houchins of Asset Living, Knightvest Residential’s Allison Crawford, as well as Brenda Lindner and Russell Church of RAM Partners.
The company further added that the fraud prevention alliance will allow property managers to accelerate the adoption of digital identity solutions to prevent fraud in real estate.
Toward that end, 100 has rolled out a product it calls VERIFIED by 100, a product that integrates CLEAR’s proprietary identity verification network directly into property management systems. Last year, 100 partnered with CLEAR to launch the Verified Renter Network, whose stated goal is to streamline multifamily rental application and screening processes with an eye toward preventing fraud.
According to 100, the Verified Renter Network identifies individuals who pose minimal fraud and security risks to landlords. These prospective renters must undergo a background check and meet specific standards set by a consortium of real estate owners and operators to be a Verified Renter.
Once verified, renters benefit from a faster application and screening process, 100 says. As for property owners, the process saves time and also lowers costs associated with fraud. Verified Renters also have higher rental payment rates, the company further asserts.
Investors are interested in this approach to anti-fraud efforts. Recently, 100 announced a $5.2 million in pre-seed round funding from MetaProp Ventures, Freestyle Capital, RiverPark Ventures and Contest Point. A coalition of multifamily operators also participated in the funding.
Fraud vexes multifamily landlords
Fraud directed at landlords is a persistent problem in the U.S. multifamily industry. According to a 2023 multifamily fraud report from TransUnion which surveyed nearly 100 landlords, 60 percent of them said that they were victims of fraud within the previous two years. One-third of them didn’t identify the scam until after move-in.
The survey also pointed to relatively slow adoption of automated screening of tenants. About a third of the respondents only used manual tools to identify fraud: in-person interviews, queries made to references, online searches and credit checks.
READ ALSO: Rental Fraud: 3 Ways to Avoid Being a Victim
Fraud takes a variety of forms, the TransUnion report notes, especially the use of false identities, bolstered by false documents, to hide negative information about a renter, such as bad credit or skipping out on rent payments elsewhere. Other tools employed by fraudulent applicants include bogus employment documents and fake paychecks used to bolster false claims of financial solvency.
Some 43 percent of respondents said they are spending more time now on comparing rental applications to find discrepancies, and 38 percent said fraud-related evictions are up. Also, 27 percent reported increased bad debt and financial losses as a result of applicant fraud.
A National Multifamily Housing Council report on fraud came to similar conclusions. 93.3 percent of its respondents said they had experienced fraud in the previous 12 months, including lying on applicants, using a false identity or using falsified documents.
An entire industry has emerged to offer products to deal with the problem. A good many other products exist to at least partly automate the tenant screening process, analyzing data points with a goal of predicting fraud, including financial history, past evictions and foreclosures. These platforms include MyRental, SmartMove, RentPrep, LeaseRunner, AmerUSA and others.
