Low Inventory, High Demand, Tech Loopholes Drive Thousands of Rental Fraud Cases

The U.S. rental market remained fiercely competitive in 2024, as indicated by the national Rental Competitiveness Index (RCI) score of 74.4, according to recent data from RentCafe. Despite a 2.59 percent increase in available apartments—as compared with 1.89 percent growth in 2023—housing supply constraints continue to pressure renters. As a result, lease renewal rates climbed to 62.2 percent in 2024, up two percentage points from last year, reinforcing the challenge of securing new rental housing, according to the research.

Heightened demand has also played a role in the rising threat of rental fraud. More than 13,000 complaints related to rental fraud were filed in 2022 alone, according to the FBI’s Internet Crime Complaint Center, underscoring the growing risks that accompany a digital rental landscape. With 93.6 percent of rental apartments occupied nationwide—just slightly below the 94 percent occupancy rate recorded in 2023—desperate renters may fall victim to fraudulent listings in an attempt to secure housing.

The growing threat of rental fraud
Rental fraud typically falls into two primary categories—data heists and home hijacks—according to a recent report by HousingWire, Property Shield, and Altos Research. In data heists, scammers create fake listings to collect personal and financial information from unsuspecting renters. In home hijacks, fraudsters repost legitimate property listings as their own, posing as landlords to collect deposits and rent before disappearing. The consequences of these scams leave renters financially drained and without a place to live while tarnishing the credibility of the rental market.

Certain regions, such as the Northeast, which led the nation with an RCI score of 79.2, and Florida, with a score of 78.2, have proven to be particularly competitive. In these high-demand areas, renters can be even more susceptible to fraud, as urgency often leads to quick decisions. Similarly, the Midwest, with an RCI score of 78.1, and the Mid-Atlantic (RCI score 77.2) continue to see high demand, further increasing the likelihood of rental scams. The South (RCI score 75.8), California (RCI score 73.1), and the Southwest (RCI score 71.1) also show strong competition, among other markets.

The role of technology in preventing fraud
To address these growing concerns, rental screening platforms and verification tools provide comprehensive and secure tenant screening solutions that help landlords and agents validate prospective tenants while safeguarding personal data. These platforms offer key fraud prevention features that enhance security throughout the rental process:

• Identity verification: Advanced screening tools help ensure that applicants are who they claim to be by validating their personal information through credit and background checks. This reduces the risk of identity theft and fraudulent applications.
• Comprehensive tenant screening: By offering credit reports, background checks, and eviction history reports, screening services provide landlords and agents with information to make informed leasing decisions. This minimizes the likelihood of engaging with unreliable or deceptive applicants.
• Secure online transactions: Digital screening and leasing processes help reduce risks associated with sharing sensitive information over unverified platforms. Unlike scammers who operate outside official channels, these systems ensure that transactions are legitimate and protected.

While rental fraud is unlikely to disappear, technology-driven solutions can have a significant impact in protecting renters, landlords, and agents. As the rental market continues to evolve, advanced tools will be necessary to support a transparent, and efficient housing ecosystem.

Michael Lucarelli is the CEO and co-founder of RentSpree.