Why Application Fraud is a Multifamily Tech Arms Race

As multifamily executives planned for 2024, many focused on an escalating issue: application fraud. In the latest 20for20 Annual Survey, fraud prevention emerged as a top priority among senior executives. The 2024 NMHC Pulse Survey echoed this concern, revealing that 93.3% of respondents experienced fraud in the past year—a staggering 40% increase.

At the same time, the consequences of fraud have escalated, with judicial gridlock slowing down eviction processes in the post-pandemic environment. Operators are faced with a new reality where human checks are no longer a viable way to combat fraud. The challenge now lies in balancing robust fraud prevention with a seamless application process, while fraud tactics continue to evolve.

In today’s letter, we’ll explore:

• The evolving landscape of fraud and its various forms.
• The financial and operational consequences of application fraud.
• New technologies and the dichotomy between vendors’ "documents-first" and "bank-linking-first" approaches.
• The importance of human oversight and understanding local contexts in fraud prevention.