Scammers Posing as Real Estate Agents Using Current Listings to Try to Steal Down Payments and Security Deposits

New Yorkers Should Follow Simple Tips When Looking to Rent Property

The New York State Department of State and the Division of Consumer Protection today alerted consumers about real estate and rental scams, in which scammers work to steal prospective tenants’ money when they are looking to rent a home or an apartment. Rental scams are executed by criminals in a variety of ways, but the goal is the same: bilk potential tenants out of as much money as possible. According to Federal Trade Commission rental fraud data, New Yorkers claimed losses of over $1.7 million during the last three years.

“Shopping for a rental home or apartment can be a stressful, expensive and time-consuming process, especially with scammers actively trying to take advantage of New Yorkers,” said Secretary of State Rossana Rosado. “I encourage New Yorkers who are looking for a rental property to follow basic tips to avoid losing their hard-earned money through deceptive practices.”

An emerging real estate scam involves scammers who fraudulently impersonate the identity of a licensed New York State real estate professional, and present the real estate professional’s license as their own. The scammer then attempts to “rent” a property that isn’t theirs to one or more potential tenants—sight unseen—making off with security deposits, first month’s rent or prepaid rent. The scammers take legitimate rental postings and re-post or advertise them with their own contact information, often at enticing, lower rates than the original advertisement. The transactions are generally conducted by phone, text message or email with the scammer asking for a wire transfer, prepaid debit card, payment on a cash-based app or other method of payment that is not traceable.

Other scams include bait-and-switch techniques where a different property than the one available is advertised; rentals that are listed with features they don’t really have in order to garner higher rent; and charging potential tenants fees for background checks, then stealing the money and disappearing.

REBNY President James Whelan said, “We appreciate efforts by DOS to raise awareness of this problem in order to help protect the interests of consumers and members of the real estate industry. In addition to harming renters, these reprehensible scams can severely damage the reputations and livelihoods of New York’s honest, hardworking real estate agents, and such behavior has no place in our state.”

New York State Association of REALTORS®, Inc. Chief Executive Officer Duncan MacKenzie said, “The New York State Association of REALTORS®, Inc., the largest real estate trade group in the Empire State, applauds the Department of State and the Division of Consumer Protection for publicizing these illegal actions.  We join DOS and DCP in urging consumers to be cautious about all real estate transactions and to always verify the identity of those they are engaged with.  We will share this important alert with our 65,000 members and the many consumers they represent.”

To avoid falling victim to a rental scam, New Yorkers should follow basic tips:

• Verify that the real estate professional you are dealing with is licensed in the State of New York by visiting the Department of State’s Public License Search.
• Validate the real estate professional’s identity by conducting an independent online search to obtain the phone number associated with the professional’s license address. Call the number to verify. You can also request to see a copy of the DOS-issued photo license and arrange an in-person or video meeting to compare the ID.
• Confirm that the property you are interested in is legitimately on the market. Many scammers act as representatives of real estate that is not on the market or does not exist.
• Avoid paying any advance fees or deposits before having an opportunity to inspect the premises. Additional information on the types of fees an agent might be permitted to collect is available here.
• Never give checks or wire money directly to the agent. Agents must be paid directly from their broker of record. Deposits and fees should never be in the name of the agent.
• Demand a refund of your deposit or commission fee if the agent does not finalize rental or sale of the property. An agent earns a commission when he or she assists the landlord and tenant in reaching an agreement on all the terms of the apartment rental.
• Request everything in writing, and get receipts. Never complete transactions in cash. It is always better to leave a paper trail by using a credit card or a personal check. Make sure to save a copy of the payment for your records and keep in a secure location in case they are needed to dispute a charge. Real estate professionals are required by law to provide you copies of all instruments relating to the transaction.
• Refrain from providing personal or financial information unless you are absolutely sure you are dealing with a reputable business or agent.

If a consumer has fallen victim to a rental scam, they are encouraged to file a complaint with the Division of Consumer Protection. When the Division receives complaints about real estate agents or brokers, the complaints are referred to the Division of Licensing Services, which is responsible for licensing these professionals.

Additional consumer resources on rental scams are available on the Department of State website here and here.

About the New York State Division of Consumer Protection

The New York State Division of Consumer Protection serves to educate, assist and empower the State’s consumers. Consumers can file a complaint with the Division of Consumer Protection at https://dos.ny.gov/consumer-protection.

For more consumer protection information, call the DCP Helpline at 800-697-1220, Monday through Friday, 8:30am-4:30pm or visit the DCP website at https://dos.ny.gov/consumer-protection. The Division can also be reached via Twitter at @NYSConsumer or Facebook at www.facebook.com/nysconsumer.

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