Property management professionals continue to navigate a rise in fraud in tenant applications. In a survey of over 3,000 property management professionals commissioned by Informed.IQ, a developer of artificial intelligence (AI)-based software for income and employment verifications, 85% of respondents said they are dealing with fraud at least 39% of the time.
The survey was conducted in July and included 61.6% of respondents who are managing residential units, 29% who are managing commercial facilities, and 10% who are managing mixed-use properties.
When it comes to tenant verifications, nearly half of the respondents, 46%, said they conduct them manually, while 28% use tenant screening software and 26% outsource to third-party services.
The biggest challenge for property managers around the verification process is that it’s time-consuming, reported 27.3% of the respondents. Other challenges cited are: lack of reliable data, 18.2%; inconsistent results, 17.2%; high costs, 14.1%; and legal compliance issues, 12.1%. Nearly 1 in 4 property managers that deal with fraud said they encounter it in a quarter of all applications.
With 51% of managers reporting that they still verify applicants and documentation manually, 31% cited a lack of suitable technology as the reason and 29% said they still have faith and trust in the legacy manual process. In addition, over a third, 39%, said they do not utilize any fraud detection technologies.
According to Informed.IQ, the rise in AI adoption has created new opportunities for the application process. Over half the respondents said they hadn’t considered using AI and machine learning solutions in the past but would be interested in learning more about them, and 23% said they are considering these options.
Of those considering, 22% of respondents said improved accuracy in spotting fraud would be the primary benefit, while 20% each cited faster processing, enhanced compliance, and better risk management.
However, concerns around AI and machine learning remain, with 22% saying they are worried about the integration with existing systems. Other concerns included bias and fairness in the data algorithm, 21%; implementation costs, 20%; data privacy issues, 18%; and lack of technology understanding, 18%.
“Despite advancements in technology, property management professionals still face significant challenges with applicant fraud and verifying applicant information,” said Mac Rechan, head of partnerships at Informed.IQ. “It’s alarming that a substantial number of managers continue to rely on manual application verifications, a process that is not only time-consuming but also prone to errors and fraud. … Embracing AI verification technology is no longer an option but a necessity for the multifamily industry to combat fraud and streamline operations.”
