Online Fraud has been with us since the birth of the internet and, despite continual improvements in preventative techniques, it is widespread and growing. In 2020 alone, Spirited analyzed application documentation for over 15,000 rental applications. On average, our customers saw a 14% fraud rate – up significantly from previous years.
Daniel Berlind, CEO of Spirited, explains, “Fraud has always been a factor in the multifamily industry. However, until the recent introduction of various fraud protection tools, we had no way of identifying it until we ended up with delinquent rent or eviction, so putting data behind it was challenging.”
Why do people commit application fraud, and why is it on the rise?
There are various reasons - ease of access, sociological and economic factors all play a part. The degree of technical knowledge required to commit card fraud is now minimal. And it is certainly not expensive; most people have everything they need to commit financial document application fraud sitting right in their home offices.
Buying fraud protection vs. building your own
As the nature of fraud evolves, the techniques and technology required to defeat them also need to. This is the core conundrum in the buy vs build decision. It is not a one-time decision. It is an ongoing and significant investment. This is true whichever way you choose. The real decision is: which path is likely to result in the best outcome for your business?
Businesses have three choices when it comes to fighting fraud:
- Ignore the problem (hint – we do not recommend this one!)
- Build your own solution
- Use a third-party solution
The best fraud detection solution is one that works but is also suited to business needs of speed and convenience. Building, maintaining, and supporting a system is a significant undertaking. So we go back to the core question - why build in-house? Ask yourself:
- Is it a natural extension of existing systems and skills you already have?
- Is the nature of your business or its risk so unique that you have no choice but to build internally?
- Is there a regulatory reason that compels you to do it in-house?
- Is it a competitive advantage in your market to do it in-house?
- Do you have sufficient data to create efficient fraud detection models?
While you may have answered ‘yes’ to several of these, designing and maintaining your own fraud detection engine requires many resources that could be better utilized elsewhere.
We’ve been in your shoes
After trying and testing nearly all the available tools on the market, the founders of Spirited found that none of them were quite right for the modern property management business environment, so they decided to build it themselves. This idea eventually grew and then evolved into Spirited.
Designed by residential property managers for property managers, Spirited identifies fraud using two primary tools. The first enables us to catch prospects using fake or stolen identification, and we also identify financial document fraud. We monitor the trends monthly and see the impact these tools have within our portfolio and throughout the industry.
Berlind explains, “The opportunity to prevent fraud occurs at the beginning of the customer lifecycle. The legal requirements to act with current residents are both consuming and costly. Therefore, we do everything possible to reduce our risk during the application process.”
Leverage Industry Insights
Spirited solves the problem of application fraud specifically for the residential rental industry from the deep insights gained from decades of industry experience combined with state-of-the-art technology.
We’re the only company in the space to authenticate financial documents and maintain a fraud detection database of some of the largest portfolios in the country, which we leverage to proactively improve our technology. And finally, Spirited’s fraud detection software is designed to integrate seamlessly into your current tenant screening process.
“For so long, we were forced to accept that this problem existed and very little could be done about it. Now we do not have to guess or take chances; we have the tools to make the right decisions. Our goal is to provide our residents with a quality living experience and to act as a fiduciary to our investors; therefore, we want to ensure we are doing everything possible to minimize potentially disruptive residents within our communities.”
The bottom line? You don’t have to reinvent the wheel to start fighting fraud. All you have to do is to decide to use Spirited. Request a demo today and see just how easy it is.
