Landlords: Don’t Fall Victim to Tax Return Scam

by Chris on February 6, 2012

The IRS has uncovered a disturbing new trend:  Identity thieves who steal Social Security numbers also are filing fake tax returns.

The urgency of the problem became apparent when the IRS partnered with the Justice Department last week in a national law-enforcement sweep.  So far, the massive national crack down has revealed thousands of potential victims, but also has exposed some of the ways the thieves are getting access to SSN’s. 

Identity thieves use the false returns to obtain tax refunds, and then are free to use the fake identities to commit other crimes, like renting properties in order to house their criminal operations.

It would be easy for these scammers to rent a house or apartment using the false identity.  To an unsuspecting landlord, the fake tax return would look legitimate.  But a landlord who falls for the trap could one day get a call from the police telling them that the property was used for a drug ring, or show up for an inspection to discover that the tenant has vanished.  The landlord may wind up paying for the damage to the property, fines, or lost rent. 

When it comes time to hold the tenants accountable, the landlord may not know where these persons are — or who they are.

Landlords need to be on guard to avoid getting ripped off by identity thieves.  Following these simple precautions can help keep you and your property safe:

Put rental prospects on notice in your rental ads and in the first phone conversation that you will be requiring a tenant background check.  This may discourage a would-be scammer who wants an easier mark.

Use Caller ID to keep track calls coming in and compare those numbers with “no-shows” for appointments.  Be on the watch for anyone who tries calling back using a different name or persona.

Always ask to see a photo ID when you first meet a prospect.  Make sure the name matches the one given over the phone when setting an appointment.  Take the time to look it over, especially the photo.  Either copy the ID or note the identifying information to cross check against the rental application and tenant screening reports.  Pay attention to the prospect’s reaction when you study the ID.  Many times a con will use an out-of-state driver’s license because a local landlord will not be familiar with the format.  Be prepared to apply more due diligence with out-of-state applicants.

Consider accepting a check or credit card rather than cash for the application fee.  This allows one more level of disclosure before you hand over the keys.

In addition to requiring a completed rental application from each adult resident, demand supporting documentation to back-up the answers, like bank records, paycheck stubs, a bill or letter showing the current address.

Pay close attention to any information provided in the credit report, like previous addresses. While stealing a Social Security number isn’t exactly rocket science, accurately re-creating the victim’s credit history on the rental application can be quite difficult. 

Don’t be shy to ask questions about the information in the tenant screening reports during the applicant interview to make sure they can keep up.

Let the applicant know that you will be checking up on the property on a regular basis.

Each step you can take to deter a would-be criminal preserves your profits, and your peace of mind.

 

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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