LEARN FROM THE PROS: RENTAL PAYMENT SCAM THAT GOT US
As an intelligent property owner or manager, you’re already in the practice of using technology to make your business more efficient and scalable. In a world where people have internet access via the small computers in their pockets, catering to this world of decreased hassle for the benefit of your tenants is a no-brainer. That being said, from time to time, the use of new modes of doing business can lend themselves to attempts at deception by those who have nothing to lose. Tenant rental payment is THE area that you want to ensure is buttoned up on your end, as it is the life blood of your operation.
At Nexus Property Management®, we process thousands of payments weekly, and we want to help you learn from a scam we recently discovered, and have subsequently learned from:
Following the Nexus core principle of making life easier for tenants in an effort to ensure long term tenancy, we offer tenants the option of paying online using our tenant payment software. A tenant took it upon herself to link a fraudulent payment account to our system so that ultimately the software acknowledged that she had “paid her rent”, but only because notification that payments had bounced due to insufficient funds had been delayed, by the very nature of banking/paying online. The tenant was paying in small increments weekly, rather than the typical monthly sum, which also helped her evade detection. On top of that, her weekly payment approach had a second effect: when we began filing necessary paperwork for eviction, her “payment” came in (per the software) and reset the process leading us to believe she was all set.
With a smaller operation, rather than the 700 plus units we manage in Rhode Island at the time of this writing, this would’ve been easier to catch in its infancy, but it’s still a very real scam that your tenants could employ at any time. Because we are larger, the delayed income (eventually used her deposit to make up for losses) didn’t impact us as much, but it could prove detrimental if you only own/manage a couple buildings.
SO IN THE END, WHAT DID WE DO? WHAT DID WE LEARN? AND WHAT SHOULD YOU DO?
As soon as it was apparent that this was intentional and we got a feel for what was going on, we immediately shut off the tenant’s software payment option. Therefore, she had to pay in person or by mail. Additionally, the only form of payment that would be accepted was a money order or cashier’s check, to ensure that the money was in hand and guaranteed not to bounce. And guess what happened…? She left. Which means she vacated without notice (as outlined in her lease) and we were able to apply her deposit to the monies owed.
Going forward, any time we find a pattern of insufficient funds we will contact the tenant immediately. This updates the tenant if need be and if they are trying to scam us it let’s them know that we’re on to them. Like we did in this instance, we will also shut off their online payment account. The tenant will then be forced to pay in person or through the mail with a guaranteed form of payment, such as a money order or certified check.
REMEMBER, whether you’re the owner, or managing on behalf of someone else, it is essential that rent payment is consistent and accounted for at all times. Bumps in the road, like this, are only bumps if you are finely attuned to your clients’ needs and able to iron things out quickly and efficiently. Like all successful businesses, we see obstacles as opportunities to learn from and improve upon. As the Property Management Authority®️, Nexus hopes that you can learn from our experiences as well.
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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