In 982, Erik the Red was exiled to the land we now know as Greenland. Mostly barren and devoid of civilization, Erik named the new country ‘Greenland’, despite 71% of it being ice. The implied promise in the name worked and attracted enough people to establish two new colonies. And so Erik the Red pulled off the world’s first property scam, falsely advertising a land that wasn’t his to people who didn’t know better.

Property scams, it would appear, have existed since the beginning of time. Adding rented properties to the mix just gave scammers a whole new avenue to work with. Scams lately have become more sophisticated but with the evolution of technology, they have become easier to identify and report.  

Unfortunately, the past two years saw a 46% increase in rental scams. The top three states to have received the most rental scam complaints in 2021 were Idaho, Hawaii and California. Unsurprisingly, Florida isn’t far behind with over 19 cases reported in just Orlando last year.

Type of Lockbox Scams  

Scammers, somehow, appear to be a very progressive group, always finding a way to adapt to the latest trends. With self-showings gaining popularity recently, many scammers have attempted to use this to their advantage.  

Here are a couple of examples of lockbox scams property managers have been struggling with:  

Phishing

The scammer sends an email or message to the buyer with a fake link to a lockbox system. The link leads to a fake login page where the buyer's information is captured by the scammer.

(Yes, it happens frequently enough to warrant its own term)

Hacking into lockboxes

‍The scammer hacks into the real estate company's or agent's lockbox system and changes the lockbox code or location, diverting the buyer's funds to their own account.

Fake Listings

The scammer creates a fake listing for a property and provides a lockbox code, leading the buyer to believe they have access to the property, when in fact they are sending money to the scammer.

Self-showings are conducted via lockboxes that store keys. The prospect at the time of the showing is provided the code that unlocks the lockbox, giving them access to the property.  

There have been reports of rental scams, in Florida in particular, where scammers got hold of these codes, allowing them to claim ownership or representation of the property. They listed the property online and scammed unsuspecting leads into signing fake leases and depositing the first month’s rent.  

Of course, a few days later, when victims had even moved in, they had to be evicted and the ploy was reported.

Forced Entry

Not so different from regular break-ins, scammers try to pry open the lockboxes or even burn them to gain access to the property – either with the intention to live there illegally or rent it out under a fake lease.
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Phony Leads

‍There have been cases when the scammer has tried to dupe the property manager instead of leads looking for properties.  

A property manager reported that he got a message from a woman claiming she had been scammed. She had been shown the property by the scammer and had the keys to the property. She had sensed she was being scammed and therefore had held on to the keys. She asked for the lockbox code so ‘she could return the keys’.  

She even went so far as to say she had informed the police who would be contacting the property manager. Of course, the call from the police was a phony call too.  
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Tips To Prevent Rental Scams

While it’s definitely terrible for leads who have even paid rent and are all but moved in, rental scams create their fair share of headaches for property managers too. Having to deal with fake listings, squatters and evictions can be equally draining. Not to mention beleaguered properties who demand compensation from property managers. In some cases, property managers have to bear the cost of move-outs as well.

The best way to prevent scams is to stay one step ahead by taking the necessary precautions. Investing in the right technology can help you reduce rental scams significantly. According to industry experts, here are the best preventative measures you can take:  

Invest in intelligent, fraud-proof lockboxes

‍Perhaps the most effective measure is ensuring that your lead verification process for self-showings is robust. Different property management software offer varying degrees of security.

LetHub has a stellar two-step verification system that leaves no room for fraudulent behavior. Leads who book a self showing with LetHub have to verify themselves with an ID card and a selfie. Intelligent facial recognition technology catches any discrepancies instantly, making the process incredibly secure.  

All data is then run through an extensive database and verified in real time before the showing is confirmed. In case a prospect who has booked the self-showing skips this step, they are sent a reminder or the showing is automatically canceled. Truly, it is better to be safe than sorry.

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