Identity fraud is an increasing concern for property owners. A Feb. 2023 article in The Globe and Mail quoted a brokerage, which stated that they had noticed an increase in falsified tenant applications (at least five fakes per month, up from 1-2 per year they were seeing 18 months ago). This takes place within the context of an uncertain economic climate, where stretched consumers have been forced to make hard choices on what bills they can afford to pay, and this includes rent. In the TransUnion survey, more than half of property owners indicated that they were concerned about fraud (51%), specifically with relation to prospective tenants providing false information. Therefore, gaining a clear view on a consumer’s overall credit picture and trusting that the consumer is who they say they are, are essential.
Despite the clear need to evaluate a prospective tenant’s payment behaviour, only 30% of property owners participating in our survey always did a credit check or asked a tenant to provide a credit report. A staggering 37% of property owners never did a credit check or asked a prospective tenant to provide a credit report.
As with so many other processes in our digital age, the property rental application process can now be done electronically, which may increase the risk of fraud. The TransUnion survey illustrated that the market could benefit from technology that actively prevented fraud and facilitated the safe sharing of sensitive data. According to the survey, 38% of the independent property owners surveyed in Canada were not satisfied with the existing processes they used to screen tenants. When asked which benefits would be most appealing, the property owners cited online access to prospective tenant information (42%) and built-in identity verification tools (31%). Without adequate tenant screening, property owners lay themselves open to non-payment of rent and tenant identity fraud.
The challenges reflected in the survey data highlight that both renters and property owners are affected by the cumbersome process of sharing credit information. By improving electronic security and ID verification processes, both renters and property owners can feel more confident in digital property rental application processes.
Property owners are not alone in their challenges. Prospective tenants also find the process of obtaining and providing their credit information challenging. In the survey, 88% of respondents stated that they had rented in the past. Within this group, the most common sentiment was that the process to obtain and provide a credit report was time-consuming (39%), with 25% describing it as complicated.
In a global landscape where data protection is more important than ever before, it is important to understand consumer sentiment in relation to data sharing. Our survey illustrated that 36% of consumers would be likely to give consent for a property owner to review their credit report, while 37% of respondents said they were unlikely to give consent. Half of the renters who said they wouldn’t consent attributed this to a lack of relevance, while 40% were worried about potential fraud. This illustrated a need to empower and assure the consumer that their information would be protected in this scenario.
PropertyReducing the risk of fraud in a rental transaction is critical for both property owners and tenants. Mitigating this risk begins with simplifying the manual, friction-filled process to provide credit report information and identity verification.
A simple, robust digital screening process will not only assist with combatting fraud but provide a secure and efficient experience for both property owners and tenants when sharing credit information.
In response to this industry-wide challenge, TransUnion has designed ShareAble for Rentals, a solution that offers more secure access to consumer credit reports. This enables property owners to make better informed decisions about prospective tenants. The solution integrates with rental listing platforms, rental solution providers and property management companies to simplify the screening process on both sides. This innovative approach empowers property owners and consumers at every step of the credit information process, enabling the efficient exchange of credit reports, and delivering more security, more simplicity and more support.
Contact TransUnion Canada to find out more about our ShareAble Solution for Rentals.
Note on survey
TransUnion’s property owner insights were obtained through a survey of approximately 1000 respondents in Canada. The survey was concluded in September 2022.