Nobody ever expects to get scammed. Nobody ever even thinks they’re going to be scammed.
In fact, most people only learn about the scam after it’s been enacted and, unfortunately, after the victim has suffered the financial consequences.
If there’s one thing that I’ve learned about rental scams through two decades of working in the real estate industry, it’s this: You don’t need to understand the scam for it to be real.
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Why Scams Are Hard to Predict
Any good scam will be new and unheard of, and the entire point of the scam is that the victim doesn’t know how it works, thus how the scammers are able to pull the wool over our eyes.
When it comes to the Toronto rental market, scams are all too common. And because it’s so hard to remove a tenant – even if they’re running a scam, because of the protections offered in the Residential Tenancies Act, it means any property owner looking to lease out his or her house or condo must take dramatic steps to ensure that the tenants and the lease offer are legitimate.
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How to Prevent a Scam
Here are the steps that we recommend taking, and which we take on behalf of our landlord clients, with every property we lease:
1) Credit Check
Running a credit check on the potential tenant is not just enough on its own, but it’s a start.
A credit check contains more than just a “score.” It contains the applicant’s credit history, credit payment history, defaults, delinquencies, applications, and most importantly, their current debt load.
We only use Equifax, Trans Union, or Credit Karma, but our preference is Equifax. We also will only accept the full document, and not the first page that contains the applicant’s FICO score, and this document must be original and not scanned. Not only that, we often accept the applicant’s credit check and then run our own to look for inconsistencies.
If they give us a credit check from Equifax and we run our own credit check from Equifax, the two should be identical. If they’re not, then there’s a problem.
2) Employment Letter
We require an employment letter with the applicant’s name, job title, salary, bonus, and tenure. Any letter without these four items is insufficient.
We then do a search on LinkedIn to, once again, look for inconsistencies. Who signed the employment letter? Does that person exist? Are they on LinkedIn? Anybody can download a logo for a large Canadian corporation, paste it into a Word document, and then sign a letter. Can you speak to the person who signed the employment letter? Is this person listed on the company’s website?
For companies you haven’t heard of, Google them and see what you can dig up. Do not rely on what the applicant has provided you with. After all, when you call the applicant’s employer, it could simply be a friend (or another scammer…) on the other end of the line.
3) OREA Rental Application
This is a standard document that is always provided to us by applicants and acts as a summary, containing the applicant’s name, current place of address, last place of address, landlords’ information, employment, employer’s information, salary, and references.
Once again, we look for inconsistencies between this document and every other document provided. You’ll notice a pattern here – inconsistencies are the best indication that there’s a problem with a tenant’s application. Look up the references named within the application. Are these people real? Do they have an online presence?
4) References
It’s sad to say, but many landlords don’t actually check the applicants’ references. They simply look to see, “Oh, this person provided two references with phone numbers,” and feel comfortable that there’s a name and contact information.
But who are these references? They only count if they’re real. As for the previous addresses listed, we have access to MLS and the listing history, so we’ll look up these addresses to see which cooperating agent was listed, and then call this agent to ask if it’s the same tenant. Think about it: “John” can say that he lives at 123 Fake Street, Unit #88, but what if we learned that he did not?
We also look up the names of landlords in Geowarehouse to see if they’re one and the same as what was provided on the application. If “Jimmy” is the applicant’s current landlord, per the application, but Geowarehouse doesn’t show that Jimmy owns the property, then this raises a huge red flag.
5) Photo Identification
Most applicants will provide an Ontario Driver’s License or Canadian Passport. Did you know that you can look up any Ontario license online through a government website? True story!
Many scammers don’t know this or don’t care. If you’re a landlord, bookmark that link!
6) CanLii
Did you know Canadian legal actions are public record? Here’s another link to bookmark! Maybe it’s a long shot, but there’s always a chance that your applicant is actually a professional scammer who’s been before the court five times.
7) Canadian Business Registry
How do you know if the company that your applicant apparently works for is real? Here’s yet another link to bookmark! I have discovered at least a dozen fraudulent applications over the years and most of them are from scammers who claim to work for a new technology start-up.
And why wouldn’t they? After all, they’re smart, savvy, advanced, and working for this incredible company that we’ve never heard of because we’re not working in Artificial Intelligence or Financial Technology.
Scammers rely on our lack of self-confidence to say, “Hey, I’ve never heard of this company,” for fear of not being seen as informed on advances in technology, and that’s why most scams contain fake websites for companies in industries we don’t understand. Construction and landscaping are two other commonly used sources of false employment.
8) Front Lobby
If you want to spend the money, you can always use a company like Front Lobby.
9) Open Room
Open Room is a community website for both tenants and landlords that allows you to run a search on a prospective tenant or landlord. It also allows landlords to upload court decisions to help future landlords keep track of the names of tenants who have caused issues in the past.
10) Facebook, Instagram, Google
We’ve all been doing this for years, right? Social media has given us information on complete strangers that we’ve never had before, and while many people choose not to keep social media profiles, most do.
If I receive an application from a 25-year-old, I’m going to find it very, very strange if that person has no Facebook, no Instagram, no TikTok, and absolutely no presence on Google.
I’m not saying that every single Generation-Z member keeps six social media accounts, but an extreme minority have zero and it’s simply a reason to dig a little bit deeper when you receive an application.
11) In-Person Meeting
I once represented a landlord who was a lawyer, and when I told him that he should meet the prospective tenant in person, he said, “That’s a bad idea. If I decide not to rent to them, then they have a bona fide discrimination case.”
Sure. Maybe. But the law is all grey. In my opinion, when you ask a scammer to meet at Starbucks to chat and discuss their application, that scammer will give you reason, after reason, after reason why they cannot, before eventually ghosting you. This is a surefire way to weed out scammers.
The Bottom Line
No single item from our list above is going to guarantee that you identify a scammer when they’re out to defraud you and take advantage of your rental property, but using several, most or, all of these techniques will drastically reduce the odds.
Remember: scammers aren’t looking specifically for your property. They cast the net wide, try different things, and ultimately if you start to push back, they’ll move on. They want to get caught about as much as you want to get caught up with them.
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Always Ask Questions
When in doubt, ask questions. Ask the applicant, ask their agent, ask their landlord, ask their references – ask again and again! The more you ask, the more they answer, and thus the more likely they are to slip up and provide inconsistent responses that allow you to suss out their illegitimate intent.
If this sounds like more than you can handle as a landlord, don’t worry – most people hire agents.
Feel free to reach out to us directly and we’ll discuss how we can secure you a well-qualified tenant.
Need help finding a great investment property in Toronto? Get in touch by calling 416.642.2660 or email admin@torontorealtygroup.com.
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