Online Rent Payment Fraud: What Landlords Need to Know

When landlords hear the phrase rent fraud,some may think of bounced checks or counterfeit cash. However, with the rise of online rent payment methods,fraudsters are getting clever with new methods of duping unassuming landlords. In fact, according to, there has been a steady increase in losses reported by both landlords and tenants who were victims of online rental/real estate scams in the last three years. From 2020-2021 alone, there was a 64% increase in these crimes.

Don’t let this statistic scare you: although online rent collection has certain vulnerabilities, it is still safer than offline methods of rent collection due to safeguards like encryption. But you should be aware of the risks to each online rent collection method to do all that you can to ensure your business is at a reduced risk of being scammed.

ACH Scams

ACH payments, or payments made through the Automated Clearing House Network, transfer money directly from one account to another. In this case, money would come out of your tenant’s account and into yours via direct deposit.

A strict application process is required to gain access to the ACH network. However, once you gain permission, all you need is an account and routing number to move funds from one account to another. If you aren’t careful, your login credentials could end up in the wrong hands. Once these scammers have access to your money and complete their transaction, it’s difficult to recover those funds.

You should keep your account and routing number private for that reason. Coupled with a few additional pieces of information, access to your bank account could be granted to someone nefarious. Also, if you intentionally give out your account and routing number to tenants, you lose the ability to reject payments. The ability to reject payments is extremely important—if you accept partial payments from a tenant you’re in the process of evicting for nonpayment, the court hearing could be delayed.

Additionally, tenants can file a debit chargeback dispute against your ACH rent transaction. If the tenant claims that your collection was made in error, they could successfully win the dispute and pull their money from your account. Make sure you keep any signed agreement specifying what your tenant’s rent payment is and how they will pay it each month to ensure you can fight any chargeback claim.

Credit Card Chargebacks

Similar to debit card chargeback disputes, your tenants can file a chargeback claim with a credit card as well. Paying rent with a credit card is highly requested by tenants and can be incredibly convenient, but keep in mind that there is always a possibility that the renter’s monthly credit bill will come, and they will try to dispute their rent payment to reduce their amount owed. Again, ensure you have access to the signed lease or agreement, and fighting these charges should be relatively easy.

How to Prevent Fraud

Engage in tenant screening. Tenant screening is vitally important to any real estate business. Doing background and credit checks up front can be the difference between housing a star tenant or a scammer, so make sure you take your time to go through your tenant screening checklist for each potential renter. If potential fraudsters see that you have a rigorous tenant screening process, most will know they will get caught and won’t bother trying.

Know the risks of each payment method. You will never be able to completely eliminate the risk of fraud, but knowing the ways to increase the security of each method can help you understand which risks you’re willing to take. For example, some property management software platforms will allow you to engage in direct deposit without giving out your account and routing number, enabling you to reject payments and keep that information secure.

Embrace digital rent collection methods. Being able to collect rent electronicallyis a great tool for landlords, since many online rent collection methods offer numerous data points that ensure the security of each transaction. Of course, any payment method can be manipulated by someone with ill intent, but with the added data behind online payments, the likelihood of retrieving those funds or preventing their loss in the first place is greatly reduced.

Be Informed, Not Afraid

Although no one can promise you that you will never be a victim of fraud, you can be reassured by the fact that you now have the knowledge to reduce the chances you’ll run into trouble. Be diligent and cautious. Be suspicious of anything that seems too good to be true, and keep yourself updated on common fraud techniques. 

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