Spot a rental scam before its too late

You’re looking for a new place to live. You check out Craigslist for an apartment or a house rental listing. Yes, you’ve heard that scams are common on the site, but it can’t really happen to you, right?

Wrong, according to researchers at the New York University Tandon School of Engineering. They say Craigslist fails to identify more than half of rental scam listings, and suspicious posts sometimes remain online as long as 20 hours before being taken down.

Is there anything you can do to make your chances of being a scam victim drop dramatically? Yes, and I’ll explain by answering some questions I am frequently asked:

Q: John, how often is this happening, and was Atlanta included in this study?

A: It’s happening a lot. Computer scientists at NYU reviewed more than 2 million for-rent posts and found 29,000 fake listings in 20 major cities. While Atlanta was not one of the cities chosen for the study, similar cities were studied, including Houston, Charlotte, and Boston.

My guess is that the metro Atlanta area is an attractive target because we have a competitive rental market and we are actually growing our population again since the recession. Q: How do these scams work? A: In the NYU report, there were three key types of scams: 1. In the first, a fake post instructs a would-be renter to purchase a credit report. The scammer gets a commission payment of up to $18 from the credit reporting site, even though there is no property for rent.

2. In another scheme, con artists hijack actual rental listings from other sites and post them on Craigslist at a lower price, perhaps with better amenities. Prospective renters are instructed to pay a deposit via wire transfer.

3. Another pervasive scam is the “phantom rental.” Scammers invent a so-called “realtor service” company. Targets are asked to pay fees to access listings of “private” post-foreclosure rentals or rent-to-own properties.

Predictably, the fake service has no legitimate connection with any Realtor. In most cases, these fake companies leading the scams have no actual properties listed in the first place.

In every instance, once the money is sent, it can not be recovered and the scammer disappears. Your hard-earned cash is literally “gone with the wind”!

Q: Is there a way we can spot a rental scam before we get burned?

A: Absolutely. I have found five ways you can protect yourself if you are looking for a rental online:

1. Don’t wire money or use a prepaid debit card: You should never pay a security deposit or first month’s rent by prepaid debit card or wire transfer. These payments are the same as sending cash - once you send it, you have no way to get it back.

2. Watch out for deals that sound too good: Scammers tempt their targets by promising low rents, great amenities and other perks. If the price seems much better than offered elsewhere, it may be a scam.

3. See the property and the rental agent in person: Don’t send money to someone you’ve never met for an apartment you haven’t seen. If you can’t visit an apartment or house yourself, have a friend meet the agent or landlord. Take lots of pictures — scammers detest cameras.

4. Beware the “overseas landlord” story: The scammer claims to be out of the country on business and instructs you to send money overseas. Unfortunately, the “landlord” collects your money, then vanishes.

5. Search for the same ad in other cities: If a scammer finds that a particular phrase draws well, they may place the same ad on Craigslist in a dozen or so large cities. If you find the same language listed in other cities, that’s a huge red flag.

The scammer is relying on the fact that you have no idea what he looks like. He can never agree to meet you in person anywhere. There will always be a reasonable sounding excuse for why he can’t be there. Your lesson — never pay money to someone you have not seen.

Bottom line: Finding a new rental home on Craigslist can be a wonderful thing, but know that the scammers are counting on you to trust them with your money. Make them prove to you they are legitimate before you let your cash move across the table.

You can read the full report from New York University’s Tandon School of Engineering on rental scams at my website. Go to money99.com, then click on CRAIGSLIST REPORT. To my knowledge, this is the first systematic study of online rental scams.