Avoid falling victim to rental fraud
Fraud can cause damage to your brand and bottom line23rd Mar 2022
From impersonating estate agents to falsifying bank statements, payslips and IDs or intercepting emails with instructions on where to make payment for transactions – fraudsters are using new and increasingly sophisticated scams to target every segment of the property sector. Here are three ways to make sure you avoid them.
Be extra cautious with financial transactions
‘As property transactions typically involve substantial sums of money, they are a natural target for fraudsters,’ says Ryan Mer from eftsure Africa, a Know Your Payee (KYP) platform provider. ‘Therefore, as a starting point, estate managers should re-evaluate the financial procedures they have in place for approving payments,’ he says.
While organisations like the South African Banking Risk Information Centre (SABRIC) have long warned consumers and businesses about various scams, criminal activity is still rampant in the rental sector and getting innovative and brazen in nature.
‘An increased reliance on electronic communication in the leasing process, especially during the pandemic, has meant the prevalence of scams relying on technology has increased in the last year. It is therefore crucial for estate managers to implement stricter controls, especially when it comes to the electronic transfer of funds between bank accounts,’ says Mer.
Approach all requests regarding payment instructions or amendment of banking details with caution and take steps to verify banking details by double checking them with the individuals involved. You should also carefully verify all email addresses involved in the property transaction and ignore or report any suspicious emails immediately to the police.
Where possible, always insist that important meetings take place face-to-face, preferably on your estate and be wary of future tenants who are unwilling or unable to meet in person.
Invest in the best technology
There is a range of sophisticated technology solutions available that can help reduce your risk of becoming victim to rental fraud. Even though FICA laws and recent amendments to the Property Practitioners Act have been introduced to better protect buyers and sellers as well as legitimate property practitioners like estate managers, there is still no legal obligation for an estate manager to check the identity of tenants (the onus here is on the real estate agent).
Mer suggests investing in a few programmes can ensure that ongoing financial transactions cannot be hit by fraudsters.
‘Consider implementing advanced identification technology like the use of unique thumb reporting, which is usually used in a bank screen as well as real-time risk and error alerts.
‘These digital solutions help reduce, and in many instances eliminate, human error. Where millions of Rands are at stake it pays to manage, control, and secure the entire payments process,’ Mer says.
Know where to get help
The consequences of falling victim to rental fraud are significant as it can put your estate at serious financial risk. ‘If an estate is successfully deceived into paying money into a fraudulent account, they can be held liable for damages and the costs of trying to recover this stolen money can be hefty, time-consuming, and potentially devasting for the estate business,’ explains Mer.
Create a plan (preferably a written policy that is easily accessible) and ensure every member of your team is aware of the process to follow if your estate becomes a victim of rental fraud. Consider immediate actions like calling the police as well and how you will communicate this to other homeowners. Include proactive steps like changing bank accounts, an update of your cybersecurity procedures and enlisting the services of a payment management agent.