AI tools can create fake but highly convincing documents – ranging from bank statements to payroll stubs – that can be attached to rental applications. iStock illustration

Modern rental-application fraud has been around for generations, ever since landlords first started to formally ask potential tenants for proof of employment and rental histories to make sure they were of sound character and capable of paying bills on time.

But recent skyrocketing rents, tougher eviction laws and increasingly sophisticated AI tools are all fueling a spike in rental-application fraud across Massachusetts, industry executives say.

“Even with our sophisticated operations [to do background checks], we miss things,” said Oleg Uritsky, founder and CEO of Waltham-based Helge Capital, owner of about 1,000 rental units in 25 apartment buildings across Greater Boston. “All fraud starts with the rental application – and it’s happening more often. It’s the way things are going today.”

Uritsky estimated that 50 percent of rental applications received by his firm contains some sort of “mistruth,” such as potential tenants exaggerating their income or providing misleading references.

But roughly 10 to 20 percent of applications contain “major fraud,” such as fake IDs, phony employment and rental references, and other false information designed to thwart those conducting background checks, Uritsky said.

And it’s not just owners of small apartment buildings who are targeted by scammers who plan to exploit eviction laws to stay in apartments for free for as long as possible.

National multifamily landlords also are falling prey to sophisticated scammers using fake identities, bank accounts, payroll stubs and other bogus information to pass background checks and land coveted leases.

Greystar, the nation’s largest apartment landlord, recently reported high levels of rent application fraud in many metros including Greater Boston.

In Helge Capital’s case, one of its tenants, a Lynn woman, was charged earlier this year with several fraud related offenses for signing an apartment lease using a stolen identity and Social Security number.

Her rent checks ended up bouncing and it later turned out she was improperly subleasing her apartment, Uritsky said.

Identity Theft Fuels Fraud

Building owners and industry leaders say a number of factors have led to the recent spike in rental-application fraud.

First, it’s simply become easier to steal, or even buy, other people’s identities over the web, specifically via the dark web, and then use the fake IDs to secure rentals.

The rise of advanced software and AI tools has also made it possible to create fake but highly convincing documents – ranging from bank statements to payroll stubs – that can be attached to rental applications.

Executives add that rising Greater Boston rents – now averaging around $3,300 to $3,400 per month, according to Zillow and Apartments.com, respectively – are acting as further incentives for people to try to cheat on rental applications.

But they save their biggest complaints for state eviction laws that they say are making it extremely difficult to crack down on what some call “professional” apartment scammers determined to get into units and skip payments.

In particular, landlords are furious about a new state law, implemented earlier this year, that allows the records of past eviction actions against individuals to be sealed in some circumstances. The law makes it impossible for landlords to check some would-be tenants’ rental histories, they say.

“It’s basically handed fraudsters a new opportunity to cheat,” said Douglas Quattrochi, executive director of MassLandlords, a 2,500-member organization representing multifamily building owners across the region.

Some scammers know state eviction laws so well that they move out of apartments just prior to final eviction verdicts being handed down by judges, leading to dismissal of cases and eliminating legal paper trails, Quattrochi said.

Supporters of the legislation, including Greater Boston Legal Services, said it removes discrimination against tenants who have past evictions, even if a case was ultimately dismissed, and removes barriers to stable housing particularly for women and people of color.

Greystar, the nation’s largest apartment landlord and developer of three new buildings in Everett’s commercial triangle, recently reported high levels of application fraud in many metros. Photo by James Sanna | Banker & Tradesman Staff

Landlords Shoulder Costs of Legal Fights

Amir Shahsavari, president of the Small Property Owners Association and owner of five rental units in two buildings in Beverly and Rockport, said state eviction laws are being manipulated by fraudsters who often aim to stay in apartments rent-free until lengthy eviction proceedings are finished.

“They’re emboldened by rules that can delay the inevitable,” he said. “If they can get something for free, they’ll take it. It’s alarming.”

Adding everything up – the rise of identity theft, increasingly sophisticated fraud software and AI tools, higher rents and tougher state eviction laws – can lead to landlords regularly losing tens of thousands of dollars in missed rents and expensive legal bills as a result of increased rental scams.

“The stakes are a lot higher today for landlords,” said Quattrochi. “It’s a really scary time. Rent application fraud is a huge problem.”

One of the more egregious local examples of rental fraud involved a Massachusetts couple, Russell and Linda Callahan, who were indicted this summer after being evicted from rental units more than 20 times over the past two decades, with judgments for unpaid rent surpassing well over $100,000.

Earlier this year, the Callahans, described as “professional tenants,” were indicted on criminal charges tied to alleged  “theft, forgery and fraud for providing fake credit reports, pay stubs, and other documentation, and then bouncing the checks for rent and security deposits,” according to an NBC Boston investigation.

Small landlords are often the target of rent fraudsters, Quattrochi said, precisely because they don’t or can’t always conduct extensive background checks.

“You have to pull all the records yourself – and not rely on what others give you,” he said of rental application documents. “It’s a very tricky thing to get right.”

Tasso Athanasopoulos, a Lynn dentist, said he knows all about the vulnerabilities facing small landlords.

He said he once rented the top floor of a Lynn building where his dental office is located. He only later found out his elderly tenant, who he said had been violating various lease provisions, had been living in his rental unit for years under a false identity.

It turned out she was trying to hide previous eviction actions against her by past landlords, he said.

In the end, it took four years and three months to evict the woman from his building.

“I will never rent that unit again,” Athanasopoulos said. “I’d rather take a fork and stick it in my eye and twist than rent it again.”