You don’t want your kids to say it, you’re offended when a passerby mutters it. The dreaded F-word. That’s right…
Today we’re talking about payment fraud–specifically, fraud occurring when you collect your residents’ rent each month. Whether you like it or not, you’ll likely encounter it at some point in your time as a property manager. In today’s blog post, we’ll cover what you should look out for, and the steps you can take to minimize your risk of being subject to it.
What to Watch Out For
Regardless of your method of rent collection, each one has its associated risks (though, some are riskier than others–more on this later). Let’s break it down by type:
The main problem with cash payments when it comes to fraud is the complexity of tracking this method. Counting and recording such a large expense like rent is no easy task, and it leaves you vulnerable to a classic he said/she said dispute with your residents.
An overpayment scam is one way a resident may use this method against you, where the scammer will write you a check for more than they owe. They’ll then request the difference, only for their check to bounce–leaving you out of that difference and with none of what you were owed.
The most common network for direct deposits from one bank account to another, ACH payments are a highly convenient form of rent collection. Fortunately, in comparison to other methods, fraud within ACH is not all that common thanks to the network’s own efforts. That being said, if a scammer gets access to your business bank account and routing numbers, it’s as easy as initiating a payment.
Credit Card Payments
Watch out for payment disputes when it comes to residents using credit cards to pay rent. Residents wishing to get out of the rent they owe may call their credit card companies and file a false dispute, running the risk of lost payments on your end.
Also known as peer-to-peer, P2P payments are those transactions taking place on digital wallets such as Venmo and PayPal. Our main concern with P2P payments in terms of fraud is your inability to refuse payments when you use this method. This is particularly concerning for residents making partial payments in an attempt to complicate the eviction process. Fraud is only one of the risks associated with this method of rent collection–for more on why you should never collect rent through P2P applications, read our recent blog post.
How to Minimize the Risk
In reality, there is no single solution to stopping fraud. Knowing what red flags to look out for is your first step in protecting yourself and your business. Additionally, thoroughly screening potential residents is imperative to make sure you’re only renting to reliable, trustworthy people who aren’t out to scam you. But when it comes down to it, the best thing you can do to minimize your risk of falling victim to payment fraud is to move your rent collection to one secure online platform like ManageGo. Accepting multiple payment methods through one digital source allows you to track and manage your payments more efficiently; helping you look out for signs of fraud and stop it in its tracks.
No matter your business goals, ManageGo has your back. To discover just how our software solutions can benefit you and your unique property management needs, request a demo today. Or, connect directly with one of our experts and get started on your journey to better property management.
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