Fraudsters are targeting renters in the US in a scheme that’s eerily similar to a scam perpetrated recently in Western Australia.
The vice president at US-based wholesale mortgage provider Freddie Mac, Joan Ferenczy, and fraud investigations associate director, Robert Hagberg, revealed how fraudsters are now trying to cash in on the country’s housing crisis by advertising foreclosed homes as rentals on the internet.
“It works like this,” Ms Ferenczy said in a blog posted on October 8. “Once the house is sold at foreclosure, the fraudster posts an ad online and tries to rent it before it can be sold to a new owner. People contacting the fraudster about the ad are asked to submit their personal credit information as part of the lease application plus two month’s rent.”
“The would-be renters have no idea they were scammed until they try to move in. Then they discover that they either don’t have a working key, the house is for sale, the previous owners may still be occupying it, or all of the above.
“In some cases, the fraudsters reportedly changed the locks and provided a working key to the renter, who didn’t realize [sic] what was happening until the real listing agent showed up with the sheriff to secure the property.”
“There’s also nothing stopping the fraudsters from using the personal credit information on the rental application to open up credit card accounts or commit other acts of identity fraud against the victim.”
One of these advertisements appeared on the online classifieds site craigslist, which is similar to the experience of prominent Perth-based real estate group Realmark.
Realmark reported in July that its rental property listings were being illegally copied and uploaded onto a generic free classified advertising website. Prospective tenants who enquired about these properties via the fraudulent listings were asked to provide details for a personal identification check after which, their identities were stolen, the company said.
The WA Department of Commerce’s Consumer Protection unit said in July that there had been an increase in enquiries from real estate agents seeking advice on combating such rental scams.
Earlier this week, the NSW state government introduced fraud prevention guidelines on the back of a spate of scams perpetrated in Western Australia.
NSW minister for fair trading, Anthony Roberts, said the NSW guidelines provide “a set of commonsense practices and procedures for agents to confirm the identity of vendors or their representatives, as well as a list of possible fraud warning signs and what agents must do if fraudulent activity is suspected”.
A ‘Proof of Identity Checklist’ has also been included in the guidelines, Fair Trading NSW said.