©2025 Two Dots
The rental application fraud landscape has exploded in recent years. A simple Google search for "apartment approval package" reveals countless illegal businesses offering fake IDs, fraudulent income documents, and fabricated employment letters. While most property managers are familiar with synthetic identity fraud, CPN fraud, and income falsification, there's a lesser-known but increasingly common type of fraud that's catching leasing teams off guard: obfuscation fraud.
Obfuscation fraud occurs when rental applicants deliberately claim they don't have a Social Security Number (SSN) or other critical identification information when they actually do. By withholding their real SSN, these fraudsters prevent property managers from accessing their true credit history, criminal background, and rental history records.
This deception creates a blind spot in your screening process. When you can't run a proper background check, you're essentially approving tenants based on incomplete information - potentially housing individuals with poor credit, criminal histories, or patterns of property damage.
The rise in obfuscation fraud stems from a perfect storm of changing immigration patterns and evolving fair housing laws.
Historically, it was relatively rare for someone in the United States to legitimately lack both an SSN and an Individual Taxpayer Identification Number (ITIN). Recent immigrants could typically obtain an ITIN from the IRS for tax purposes and often wanted to, which many screening companies could use as an alternative to an SSN for credit and background checks.
However, today's situation is dramatically different. There are now millions of immigrants in the United States who have neither an SSN nor an ITIN, and they need housing just like anyone else. ITINs are issued specifically for tax purposes to people who need to file federal tax returns but aren't eligible for an SSN, but now there are immigrants who believe it's a risk to apply for an ITIN leaving them with no unique identifier at all.
Recent state and local laws have specifically targeted discrimination against immigrants who lack traditional identification. Key legislation includes:
Colorado's Immigrant Tenant Protection Act: This law prohibits landlords from engaging in housing practices based on immigration or citizenship status, and specifically states that in civil actions, "inquiry into the tenant's status is not permitted unless the claims raised by the tenant place the tenant's immigration or citizenship status in contention".
California's Fair Housing Laws: California law protects tenants regardless of their citizenship or immigration status, and the California Civil Rights Department "does not inquire about a complainant's citizenship or immigration status".
Source of Income Protection: Both Colorado and California have enacted laws prohibiting discrimination based on source of income, which can include various forms of assistance and non-traditional income sources.
This legal and demographic shift creates a nearly impossible situation for leasing staff. When someone walks into a leasing office claiming they don't have an SSN, the team must determine whether they're dealing with:
Get this decision wrong, and the consequences are severe in both directions:
Some property management companies have attempted to address this challenge by creating manual procedures to verify immigration status through document review. However, this approach is fraught with problems:
Developing manual programs to distinguish between legitimate immigrants and fraudsters without running afoul of fair housing laws is extremely complex. While federal fair housing laws don't prohibit asking for immigration documentation, you must ask it of all prospective tenants consistently, and several states like Colorado and California now prohibit such inquiries entirely.
Even with the best procedures in place, you're still relying on busy leasing agents to correctly follow complex protocols. In our evaluations of current residents across NMHC Top 50 partners, we consistently find that leasing agent non-compliance with screening criteria is the number one driver of bad debt.
Site teams are already overwhelmed with daily responsibilities. Adding complex fraud detection procedures that require careful document analysis and subjective judgment calls is simply not realistic for most operations.
The scope of obfuscation fraud may shock you. In our evaluations of properties in high-immigrant areas for several NMHC Top 10 managers, we discovered that up to 33% of residents who claimed not to have an SSN were providing false information and were still approved to move in.
This isn't just a financial risk—it's a safety risk. When fraudsters successfully hide their identities, you're not just missing credit problems; you could be missing serious criminal records that put your community at risk.
At Two Dots, we've developed AI technology that can determine whether someone is telling the truth about not having an SSN. Our system:
We use advanced data analytics and alternative verification methods to identify when applicants are concealing their true identity, even when they claim to lack traditional identification.
For genuine recent immigrants without SSNs, we evaluate their applications using alternative data sources and documentation, allowing you to make informed decisions while staying compliant with fair housing laws.
Rather than burdening your leasing staff with complex procedures, our AI screening agent automatically handles the verification process and can even follow up with applicants to gather additional information as needed.
By properly evaluating legitimate applicants who lack traditional documentation, you can increase occupancy rates without increasing risk. Our technology enables you to confidently house recent immigrants while simultaneously catching fraudsters who are hiding negative histories.
Obfuscation fraud represents a sophisticated evolution in rental application fraud that exploits the complex intersection of immigration law, fair housing requirements, and traditional screening limitations. The challenge is real, the risks are significant, and manual solutions are inadequate.
The good news? With the right AI-powered technology, you can detect this fraud while still providing fair access to housing for legitimate applicants. You don't have to choose between protecting your properties and complying with fair housing laws.
Want to learn more about obfuscation fraud or get a free evaluation of how much of this type of fraud might be occurring in your portfolio? The results might surprise you.
Book a Demo Now to see how Two Dots can help protect your properties while ensuring fair and compliant screening for all applicants.