Scammers Use TikTok Hacks To Unleash Leasing Fraud; Real Estate Commission Issues Alert

In a cautionary alert issued by the Texas Real Estate Commission (TREC), a concerning trend of leasing fraud facilitated through TikTok hacks has emerged, particularly rampant in Houston. What initially started as a seemingly innocuous trick for renters has turned into a series of fraudulent activities, leaving unsuspecting individuals as victims of identity theft and financial loss.

The modus operandi of this scam typically involves the submission of falsified rental applications containing fabricated information such as job histories and credit reports. Perpetrators then exploit the identities of unsuspecting individuals to secure leases in their names, subsequently residing rent-free in upscale apartments or other high-value properties.

According to reports by Bisnow, TREC has experienced a surge in cases related to leasing fraud, prompting investigations and disciplinary actions against implicated real estate agents, including license revocations and administrative penalties.

The gravity of the situation is underscored by Roy Minton, TREC's Chief Investigator. "I was surprised, as we got into this, that it was more extensive than anything I’d seen in my 11 years at TREC," he said. He further noted that these scams gained momentum in 2019 and 2020, coinciding with the onset of the COVID-19 pandemic , which exacerbated housing demand and rental rates.

The repercussions of TikTok lease scams extend beyond individual victims, impacting the integrity of the real estate industry as a whole. The National Multifamily Housing Council reports a significant increase in fraudulent rental applications, with 70 percent of apartment landlords encountering such instances within the past year.

"There has been anecdotal evidence of the rise in fraudulent activity over recent years, but now we have clear evidence of the staggering impact of these crimes on the rental housing market ," said NMHC President Sharon Wilson Géno.

Notably, even industry leaders like Ric Campo, CEO of Camden Property Trust, fell victim to these schemes, highlighting the pervasive nature of the problem.

TREC's response to combatting lease fraud encompasses rigorous investigations and punitive measures targeting brokers and sales agents involved in these illicit activities . Offenders face severe penalties ranging from formal reprimands to license revocations and substantial fines.

In a particular case, a broker incurred a $1,000 fine, while two implicated agents had their licenses revoked and were ordered to pay fines amounting to $31,000 and $25,500, respectively.

Despite TREC's proactive stance against lease fraud, challenges persist in effectively addressing and mitigating this pervasive issue. Delays in initiating investigations, primarily triggered by the receipt of fraud reports , hinder swift interventions, allowing perpetrators to continue their fraudulent activities unchecked.

Moreover, the proliferation of TikTok tutorials advocating for living rent-free perpetuates the problem, potentially fuelling further instances of leasing fraud.

"While most renters are honest, those who are not are causing the cost of rental housing to increase for everyone. Additional delays in many jurisdictions in the lease enforcement process, even when there is clear fraud, incentivize bad actors and mean that this illegal behavior costs responsible renters even more. We call on lawmakers and courts to take action that will address this problem," Wilson Géno said.