Landlords - How to avoid Identity Fraud and Identify Theft.

LandlordZONE and TenantVERIFY

Landlords are particulalry vulnerable!

Through recent media reports most people are now aware of the problems of identity theft and fraud perpetrated by criminals who scour our waste bins for personal details on carelessly discarded bills and other documents.
In fact the problem goes beyond this, and landlords are particularly vulnerable – to find out why and what you can do about it, read on.
Personal details can be obtained without resorting to midnight searches through bins: sophisticated fraudsters can pick up this information from the Internet or insiders do it from banks, firms and organisations of all types.
For example, if you are a company director your personal information is available on the Companies House website for a small search fee. One recent case, involving massive credit card fraud, resulted from obtaining details in this way.
People are now asked for personal details for all sorts of reasons, including registering for services on-line. One survey organisation found that people were willing to part-with the most intimate personal details including DOB, mother’s maiden name, telephone, e-mail, address etc simply for the promise of free theatre tickets.
Another vulnerablility is the time when you are doing viewings, either on lettings or on property sales. Often owners or landlords are showing complete strangers around the property. Apart from the personal security risks, the viewer has potential access to all sorts of personal belongings and documents, often left lying around, and also to complete information on the house security arrangements.
In fact, as the law currently stands, identity theft per-se is not a crime: it’s only when this “theft� is acted upon, when the information is used to perpetrate fraud that it becomes criminal.

So, why are landlords vulnerable to this new and insidious activity?

Well, they are vulnerable on two counts: (1) tenants who come with a false identity, and (2) tenants who steal the landlord’s or previous tenant’s identities.
Tenants who come with false identities are obliviously intent on avoiding rent payment and will probably evaporate into the either at some point, having run-up horrendous rent arrears and will perhaps have damaged the property to boot?
The irony is, the law will protect any resident regardless of their identity and landlords will be unable to obtain possession against a recalcitrant tenant quickly – in fact it can take months to get an eviction if the tenant chooses to stay put.
Tenants, who steal identities, either that of the landlord, or those of previous tenants, are even more of a problem. It’s often easy for tenants to do this as mail is delivered to the address long after previous residents have left, and in my experience, even when the Post Office has been instructed to re-direct.
If the property has previously been the landlord’s own residence, which is very common, then the landlord is vulnerable, as are any previous tenants.
A recent case highlights this: The landlady, being out of the country yachting instructing for a year, rented out her own home. Although the agents did credit checks, the tenant came along with a false identity, and the checks showed up OK for the identity the tenant had.
Foolishly, the landlady had left all her personal documents locked away in an attic room, including the deeds to her house. The tenant proceeded to sell her property. Fortunately for her, one sale fell through and the second was not completed before the fraud came to light.
Basically, all the identity fraudster need do to take out a loan, a mortgage or run up huge credit card debts in your name is obtain two utility bills. The problem is, you only become aware of the crime much later when the credit card or loan companies track you down with demands for payment, or threaten legal action.
At the end of the day this type of fraud should not cost you a penny, unless you have been really negligent. However, in the mean time you may have to pay out money to defend yourself, you will need to prove that you are the victim of identity fraud, which can takes hours and hours of work on your part, not to mention the stress of it all.
In addition, if the courts and debt collectors are involved you may end up with a CCJ (County Court Judgement) against you, which will adversely affect your credit rating.
If you do become a victim you will need to gather all the information and proof you can including consulting the lender and a credit reference agency before reporting the crime to the police, who will give you the all-important crime reference number.
This type of crime is new and it is growing at an alarming rate: between 1999 and 2002 the number of cases jumped by nearly 400%. Statistically, therefore, the chances of being caught out are increasing.
The UK’s Fraud Prevention Service CIFAS, which is a not-for-profit financial services membership association, solely dedicated to the prevention of financial crime, originally estimated that in 2004, 20,000 deceased impersonation frauds were perpetrated. They concluded that in the last 4 years these amounted to around 51,000 cases, all of which would cause great distress, both to the deceased relatives and the victims of fraud.
In fact through ongoing research CIFAS now believe their figures seriously underestimate the magnitude of this crime in the UK and that the 2004 figure is nearer 70,000 cases with the four-year total nearer 180,000.

How can landlords protect themselves?

1) Check all your bank and credit card statements as soon as they arrive – if you spot any unusual entries or payments that have not arrived you need to investigate.
2) Carefully shred or tear-up important documents before discarding them.
3) Store your important documents safely – old statements, chequebooks, credit cards, passports, licences, vehicle documents, property deeds etc are all valuable to a thief – hide securely or store them under lock and key.
4) Have a secure system of storing your passwords and usernames.
5) Don’t keep chequebooks, credit cards and passwords all together in the same place.
6) Never give out personal details unless you are sure they are to a secure process.
7) If you move house have your mail re-directed and check with the new occupants regularly for mail that gets through the net.
It’s particularly important for landlords who rent out their own home: make sure that your tenants have been thoroughly checked – see below.
9) You can also check your credit reference reports every 6 months to make sure no one is applying for loans in your name.
10) Another option is to register with CIFAS on the Protective Registration Scheme – see http://www.cifas.org.uk/protective_registration.asp

Tenant Checks

It’s very important to avoid these problems in the first place by making sure that you never rent out your properties to criminals – a proper tenant screening process is the only answer. You must be thorough in the way you carry out identity, credit checks and references.
Credit checks on their own are not sufficient, though they are an important part of the process: a basic check will verify financial stability, but it will not necessarily verify identity. A comprehensive check goes further by taking up references. It would be unlikely that a comprehensive check would not uncover identity fraud, but in theory it’s just still possible.
The starting point for the whole process is the Tenant’s Application Form. A good application form is as important as the tenancy agreement itself.
The application form gives a sound basis to the relationship between the landlord and tenant: it provides all the personal and financial details needed to carry out further checks. It gives the landlord (or his agent) permission to carry out the checks, and should the tenant subsequently abscond, it gives vital skip tracing information. In addition, and a very important point for landlords, should the applicant make any false statements, the document provides evidence for eviction on Ground 17.
However, the application form cannot of itself guarantee identity: this involves additional proof. National Insurance numbers, passports, drivers licences can all be forged or stolen.
One very simple but very effective method is to request sight of 6 moths’ bank statements. An identity thief may be able to obtain two utility bills, but it’s very unlikely they would be able to obtain 6 months’ banks statements from anyone.
Secondly, the sight of 6 months’ bank statements gives you an excellent insight into the tenant’s financial standing a lifestyle: remember, no tenant should be paying more that one-third of earnings in rent.

Tenant Checks – the checklist – see the LandlordZONE article Tenant Screening for a full rundown.

1) Have your prospective tenant complete a comprehensive application form.
2) Follow-up to confirm residences and identities by checking documents and following-up references.
3) Obtain at least on copy of a document with a legible photograph or copy of one – a good photocopy of a passport or photo-driver’s licence should suffice.
4) Carry out either a basic or a comprehensive Tenant Check

Useful Links:

UK Government Crime Reduction Web Site

Australian Government Identity Theft Kit in .pdf format

© Tom Entwistle 2005 - all rights rserved