The Cost of Rental Scams

Apartment rental scams are costing would-be renters millions—and maybe billions—of dollars, according to a new report by ApartmentList. The report studied bogus listings in 31 metro areas and found that 5.2 million Americans have lost money paying for apartments that were not really available.

According to Sydney Bennet, a senior analyst at ApartmentList and one of the report's authors, young renters are the most likely to get scammed. Adults between 19 and 29, drawn to job or post-graduate opportunities, often look online for apartments in cities far from where they live, and often without visiting. They find listings, pay security deposits, and, too often, find out they've been duped.

Bogus listings come in two forms, according to ApartmentList. Some are entirely fictional “catfish” ads compiled to look enticing, while others are legitimate ads that have been hijacked by a scammer who directs apartment seekers to their own email accounts.

Bait and switch is another popular scam, according to ApartmentList. This often comes in the form of missing amenities, the most common being laundry facilities.

According to the report, young renters are 42 percent more likely to be scammed than older apartment seekers. Overall, almost half of young renters said they've encountered dubious listings and about 10 percent have actually lost money.

Renters of all ages say they're likely to find a suspicious apartment advertisement. Nationally, 6.4 percent of all renters said they've lost money to a bogus deal.

However the scam is pulled off, a lot of people are losing a lot of money. A third of the 5.2 million Americans who've lost money in a rental scam have lost more than $1,000, the report stated. That's likely after paying a security deposit or rent on a fraudulent property. Another quarter of those scammed said they've lost anywhere from $100 to $400.

Of the 31 major cities studied in the June survey, Dallas had the highest percentage of scammed renters. In Dallas, 10.9 percent of would-be renters have lost money to apartment fraud, the report found. That's almost twice the national average. Atlanta, Washington, D.C., and Denver all had scam rates around 9 percent.

Chicago and Kansas City had the lowest percentage of apartment scams. Each city saw 2.1 percent of renters bilked over rentals.

Bennet said a main red flag for apartment scams is when a listing offers a lot for much less than comparable apartments in a city—in other words, when it just seems too good to be true.