Resident Experts with Daniel Berlind
Entrata recently hosted Daniel Berlind, a real estate executive and the CEO of Snappt, a data driven, fraud detection software that helps prevent financial fraud in the multifamily housing industry, as part of our Resident Experts Series. Below are some highlights from our conversation.
Fraud currently impacting the industry
Up until 2023, financial and identity fraud had increased steadily in the wake of the global pandemic. One possible reason for this uptick is that processes that used to be primarily face-to-face like signing contracts and filling out applications are now done almost exclusively online. This detachment of something that used to be more personal and more about the relationship between residents and the property coupled with financial struggles have emboldened more and more people to commit fraud.
“At Snappt, we have over 1.5 million units using us across the country, and this year we’ve detected that 8% of our customers’ applicants have submitted fake financial documents,” said Berlind. “It’s happening continuously, and so it’s very much at the forefront of folks’ minds.”
Fraudsters are opportunistic, so when they see that you’re offering concessions like delaying when first and last month’s rent or deposits need to be paid, you’re opening the door to being targeted. That doesn’t mean you shouldn’t be offering those types of deals to prospects, but it should cause you to be more vigilant about who you approve because those are the types of deals bad actors will be on the lookout for as well.
What can you do to prevent fraud
If you want to be able to beat bad actors, you have to be on the offensive, or as Berlind says it, “Fight fire with fire.” Gone are the days when you could trust your gut and intuition to spot fraud. The bad guys are using state of the art technology to fool you so you need to do the same.
“Fraudsters are using technology and they’re trying to obfuscate themselves as much as possible,” related Berlind. “The only way you can combat that is using technology on your side.”
It’s important that you aren’t being reactive to fraudulent activities as they occur. You should have technology in place that scours the internet to identify new types of fraud to know what to be looking for will play a huge role in reducing the possibility of fraudulent applicants from infiltrating your communities.
Additionally, you should shout from the rooftops that you take fraud prevention seriously. This will deter some bad actors from applying, while also giving residents and applicants peace of mind that you are putting the necessary resources in place to protect their information.
Take advantage of the data you have in place
Because you’re always chasing a moving target when it comes to fraud, it can be difficult to land on an effective strategy. But something that should be a constant is leveraging all of the data you have available to you from fraudulent applications to help you identify trends that you can use to prevent similar fraud in the future.
“If you want to stop fraud, this is not a passive activity,” said Berlind. “This is something that requires planning. It requires software and it requires a strategy. And also being aware of the fact that the landscape is changing, so mistakes are going to be made, and this is about learning and iterating.”
In the not so distant future, you’ll be able to train AI to conduct advanced pattern matching to identify fraud much quicker and more efficiently than presently. However, it’s important to remember that AI is only as good as the data you provide it, so make every effort to collect and have the right data in place when the time comes.
Three-pronged approach to eliminating fraud
Finally, Berlind lays out a three pronged approach to eliminating fraud. First, you need to understand what risks your assets are under. Second, deploy effective screening. And third, you should be prepared to make mistakes as no solution is perfect.
While it might seem daunting and possibly costly to implement a fraud prevention solution, the benefits will far outweigh the costs. Especially when you consider the cost of evicting just one resident is more than $7,000 on average.
To learn more about how fraud is impacting the multifamily industry, check out the entire Resident Experts webinar here.