Cutting edge anti-fraud tech saves landlords over £1 million

9 August 2022

Anti-fraud tech in the referencing process has helped save landlords a combined £1 million over the past 12 months, according to Goodlord data.

An analysis from Goodlord has revealed that individual landlords would have lost a combined £1 million over the last year without anti-fraud tech picking up fraudulent tenancy applications during the referencing process.

Twenty percent of applicants flagged by Goodlord's anti-fraud technology in the past year were then confirmed as being fraudulent by its specialist team.

Based on average rental costs and minimum contract lengths, this meant that landlords would have been out of pocket by over £1 million, had the fraudulent applications not been picked up.

Types of fraud

The most common types of tenancy fraud involve providing false or doctored identification, right to rent, income, or landlord or employment references. But new tech-powered tools which use AI, open banking, and identify verification can help pinpoint suspicious documents and prevent fraudulent information from being submitted.

Blake Richmond, Managing Director of Referencing at Goodlord, says: “Agents and landlords have long been alert to the risk of fraud and, unfortunately, a small number of criminals and dishonest tenants now have access to tools that mean fraud is getting harder and harder to detect. However, the technology we can use to fight back is even stronger.

"At Goodlord, we deploy in-house ID technology like banks and airports are using to spot and stop dodgy applications as well as an entire team that's dedicated to managing and fraudulent applications and, in the last year alone, this has saved landlords over £1 million - a reminder of just how important anti-fraud measures are during the referencing process.”

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4 steps to combat fraud

Richmond recommends agents and landlords focus on three key areas when it comes to combatting fraud:

1. ID check

You can use artificial intelligence (AI) tools to check ID documents remotely. All a tenant has to do is scan their ID and snap a selfie, then a hybrid of machine learning and human expertise verifies that their ID is genuine and checks if their facial biometrics match the photo.

This technology - which is also used to match people to their passports at airport eGates - ensures that the reference that is generated is truly for the person that has entered the data.

2. Credit check

Obtaining a credit profile from a credit reference agency gives added reassurance that an individual’s financial footprint can be found online.

There are genuine reasons why someone may not have a financial profile - for example they might have only recently moved to the UK, or they're a first-time renter who hasn't used any lending products.

However, not finding a profile where it is expected is a flag that should be investigated further.

3. Income check

Open banking is the latest tool that is being used to verify tenants' incomes. Tools like Credit Kudos enable you to verify a tenant's salary information directly with their bank.

This speeds up the financial checking process with a system that is not able to be fraudulently manipulated. The same cannot be said for the use of pay slips, which are often the first thing to be falsified.

Open banking is becoming more common and, as understanding of its benefits increases among agents and tenants, we are seeing a rise in its adoption, which is reducing both referencing turnaround times as well as fraud.

4. Residential check

Open banking can also be used in lieu of a reference from an applicant's previous landlord or letting agent - which can easily be falsified by applicants using a friend or family member posing as a landlord or agent - to confirm that they paid their rent on time for their previous property.

In the same way, open banking can be used to confirm an applicant's income, it can also be used to check that rent payments were made over a specified period of time.

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