Online rental scams: How to avoid being conned out of your cash

Two Ontario strangers made headlines after anonline rental went wrong this week. The bizarre incident put a spotlight onwhat fraud experts say is an "evolving" world of scams in the online economy.

According toNikki Wilson, the alleged caper began whenshetried to rent a house advertised on Kijiji. But it turns out that somebodyalready lived there that somebody being KitPullenand the Ottawa house certainly wasn't available for rent.

In the end,Wilson was out $900 and Pullen got a mountainous pile of someone else's stuff dumped on the driveway of his home.

Rental scams aren't new, but as more of these deals move online, would-be renters need to be especially vigilant.

"There's an awfullot of thisgoing on," says Daniel Williams, senior fraud specialist withthe Canadian Anti-Fraud Centre in Ottawa.

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There havebeen 139 reports of online rental scams to the centre since Jan. 1.That figure likely reflects only a fraction of all the incidents occurring across the country, he adds.

The U.S. Federal Trade Commission callsthe use of fraudulent ads for rental propertiesa "hijacked ad" scam when a fraudsteroffers a rental property that, in reality, they have no connection to. Theother most common type is "phantom rentals," which as you can probably guess involvea property that doesn't exist.

Most people assume they're immune to the clever conartists peddling sweet deals on rental homes, condos, apartments and vacation spots.

But "scams are evolving," Williams says,especially with the growth of the sharing economy.

So here area few tipsto keep your cash away from crooks.

'Verify, verify, verify'

"Our main mantra here is verify, verify, verify. Really understand who you'redealing with," says Williams.

This might seem like plain ol' common sense, but it can be difficult especially since it's so easy to fake a sheen of legitimacy online.

The truth is that the only way to have any securitywhen renting a property online is to track down someone who has rented from the same person or company in the past.

"Anything else is a leap of faith, really. There are so many ways a fraudstercan present themselves as a property owner," Williams explains.

In some instances, you might want to push the renter to provide contact information for someone they have previously dealt with. This might not always be possible for any number of reasons, but it's worth a shot, he says.

Keep your cash close

Scammerswill almost always ask for money up front, like a security deposit or first and last month's rent. If you're not sure about where it'sgoing, don't send it. Money sent via wire service or e-transfers will be as good as gone.

Whenever possible, try to make payments with a credit card. This isn't always realistic, but there are scenarios where it makes sense, like with manyvacation rentals.

"Credit card companieshavetremendous power to get your money back to you most of the time, which isn't the case for basically every other means of payment," says Williams.

Check the place out if you can

It's always a good idea to physically see a property before any money changes hands. This isn't always possible, though, and sometimesit's still not enough to know you're being scammed.

Some con artists will go to great lengths to appear legitimate, staging elaborate charades to dupe renters.

CBC's Go Public reported last monthon a Vancouver couple who were taken for $1,000 bya career criminalin a ploy that involved both Airbnb and Craigslist.

Airbnb rental scam

9 years ago

Duration 1:49

Scammer pretends to own condo he booked on Airbnb, makes off with $1,000 deposits from Vancouverites

They aren't alone.Maxim Budnick is a 27-year-old professional model who works all over the world and moves often. He's rented or sublet 26 properties in the last three years, nearly all of them found online.

In other words, he's a seasoned renterwith a keen eye for shady offerings.

But during one move from Bushwick to a Lower East Side sublet inNew York City last year, he was conned out of $2,100 ina convolutedruse.

The arrangement was orchestrated by a couple using false identities anda third personposingas a landlord. Then the three people disappeared.

"It really seemedlegitimate," he recalls. "I even walked through the apartment a few times with them.I couldn't have imagined they'd go through all that. It's crazy, but honestly I'd bet ithappens a lot."

Slow down and know themarket

Online rental scams thrive when spaceis at a premium andpeople feel pressure to pounce on opportunity for example in hot real estate markets or in high season at trendy getaway spots.

"That's where you might overlook your gut instincts about an online offer," says Sunil Johal, policy director at the Mowat Centre in Toronto.

"Fraudsters will follow the crowd and prey on people in a pinch."

That's precisely what happened to 31-year-old Diana in Whistler last winter. (She's asked that her surname not be used.)

Two guests had flown across the continent to Vancouver to spend a late-January weekend with her,so they decided to pursuea last-minuterental in the mountain's ski village. The trio turned to Craigslist.

"It was a time crunch," she says. "We were weary ... so I called the guy who posted the unit."

They chattedand he provided email addressesfor three references. Diana followed up with all three, getting responses from each one.

After mulling it overshe sent a $600 Interac e-transfer to him. He provided a "receipt" andinstructions on it for when they arrived.

Turns out the building existedbut the specific unit she paid for did not. A property manager told her he was aware of the scamand that she was hardly the first to be fooled by it.

"Someone coming from out of town would have been screwed," Diana says. "There was always that little voice in the back of my mind."

On that point, inexplicably cheap digs in super-desirable hoods should be a major red flag.

If a renter "dodges your questions or keeps emphasizing how it's such a good deal and you need to hand over the money ...W-A-L-K away. It's a con," writes Romana King, senior editor of the website MoneySense.

Keep your guard up

As people become more comfortable with online transactions, a "certain degree of complacency" is setting in, according toJohal.

Hence an Ottawa police officer's comment toCBC News that "the internet, for some reason, seems to lull people into some sort of false sense of security."

That's partly due to the rise of the sharing economy and an explosion in online marketplacessome of whichoffer financial fallbacks for users, while others "remain a bit of a Wild West," saysJohal.

Airbnb, for example, lets users do deals directly on its platformand withholds payment until 24hours after the person renting apropertychecksin.

It's not fail safe, but it leaves less room for scammersthan Craigslist or Kijjji, which simply connect two people whileall the money changes hands outside their respective platforms.

"People have to use common sense and keep their guard up," saysJohal.

"And remember, fraudsters are smart, so they'll always be looking for the newest angle."