Leasing

Types of Lockbox Scams and How To Prevent Them

Author
Hibah Khan
Read time
5 MIN READ
Published/Updated
May 23, 2024

In 982, Erik the Red was exiled to the land we now know as Greenland. Mostly barren and devoid of civilization, Erik named the new country ‘Greenland’, despite 71% of it being ice. The implied promise in the name worked and attracted enough people to establish two new colonies. And so Erik the Red pulled off the world’s first property scam, falsely advertising a land that wasn’t his to people who didn’t know better.

Property scams, it would appear, have existed since the beginning of time. Adding rented properties to the mix just gave scammers a whole new avenue to work with. Scams lately have become more sophisticated but with the evolution of technology, they have become easier to identify and report.  

Unfortunately, the past two years saw a 46% increase in rental scams. The top three states to have received the most rental scam complaints in 2021 were Idaho, Hawaii and California. Unsurprisingly, Florida isn’t far behind with over 19 cases reported in just Orlando last year.

Type of Lockbox Scams  

Scammers, somehow, appear to be a very progressive group, always finding a way to adapt to the latest trends. With self-showings gaining popularity recently, many scammers have attempted to use this to their advantage.  

Here are a couple of examples of lockbox scams property managers have been struggling with:  

Phishing

The scammer sends an email or message to the buyer with a fake link to a lockbox system. The link leads to a fake login page where the buyer's information is captured by the scammer.

(Yes, it happens frequently enough to warrant its own term)

Hacking into lockboxes

The scammer hacks into the real estate company's or agent's lockbox system and changes the lockbox code or location, diverting the buyer's funds to their own account.

Fake Listings

The scammer creates a fake listing for a property and provides a lockbox code, leading the buyer to believe they have access to the property, when in fact they are sending money to the scammer.

Self-showings are conducted via lockboxes that store keys. The prospect at the time of the showing is provided the code that unlocks the lockbox, giving them access to the property.  

There have been reports of rental scams, in Florida in particular, where scammers got hold of these codes, allowing them to claim ownership or representation of the property. They listed the property online and scammed unsuspecting leads into signing fake leases and depositing the first month’s rent.  

Of course, a few days later, when victims had even moved in, they had to be evicted and the ploy was reported.

Forced Entry

Not so different from regular break-ins, scammers try to pry open the lockboxes or even burn them to gain access to the property – either with the intention to live there illegally or rent it out under a fake lease.

lockbox scams

Phony Leads

There have been cases when the scammer has tried to dupe the property manager instead of leads looking for properties.  

A property manager reported that he got a message from a woman claiming she had been scammed. She had been shown the property by the scammer and had the keys to the property. She had sensed she was being scammed and therefore had held on to the keys. She asked for the lockbox code so ‘she could return the keys’.  

She even went so far as to say she had informed the police who would be contacting the property manager. Of course, the call from the police was a phony call too.  

prevent lockbox scams

Tips To Prevent Rental Scams

While it’s definitely terrible for leads who have even paid rent and are all but moved in, rental scams create their fair share of headaches for property managers too. Having to deal with fake listings, squatters and evictions can be equally draining. Not to mention beleaguered properties who demand compensation from property managers. In some cases, property managers have to bear the cost of move-outs as well.

The best way to prevent scams is to stay one step ahead by taking the necessary precautions. Investing in the right technology can help you reduce rental scams significantly. According to industry experts, here are the best preventative measures you can take:  

Invest in intelligent, fraud-proof lockboxes

Perhaps the most effective measure is ensuring that your lead verification process for self-showings is robust. Different property management software offer varying degrees of security.

LetHub has a stellar two-step verification system that leaves no room for fraudulent behavior. Leads who book a self showing with LetHub have to verify themselves with an ID card and a selfie. Intelligent facial recognition technology catches any discrepancies instantly, making the process incredibly secure.  

All data is then run through an extensive database and verified in real time before the showing is confirmed. In case a prospect who has booked the self-showing skips this step, they are sent a reminder or the showing is automatically canceled. Truly, it is better to be safe than sorry.

Change the lockbox code often

If a scammer gets hold of a lockbox code, it makes it all the easier for them to gain access to the key and show the property to leads. Changing the lockbox code often is a necessary security step for all property managers.  

Even better is using a software like LetHub which makes code stealing impossible. LetHub issues a new one-time pin (OTP) to leads on the day of the self-showing. This code is also only sent to the lead’s verified phone number. This effectively puts an an end to all scammers who gain access to a property’s keys and rent it out to multiple tenants.  

Using blockchain technology

Blockchain technology is an example of tech that keeps on giving. It can be used to protect property listing data by creating an immutable and secure ledger that stores the details of the listings.  

This ensures that the original listing data cannot be altered or tampered with, reducing the risk of scammers copying and posting the ad as theirs. Additionally, the use of smart contracts in a blockchain can automate the process of verifying and transferring property ownership, further enhancing the security and reliability of the listing data.

Watermark photos

Make sure any property photos you upload are watermarked to prevent scammers from using them for their own fake listing ads. Property managers now integrate with Zapier to set up automated workflows so they don’t have to do this for each property manually.  

Google Drive → PowerTools – Watermark property images uploaded to Google Drive

Use signage on all your properties – Signage on your properties is usually a deterrent to scammers looking to rent out your property. Make sure you add the phone number and the method of communication you use to communicate – e.g. specifying that you don’t use WhatsApp or Facebook etc to contact leads.  

Leads who have reported the scam without falling victim to it completely usually get suspicious after viewing the signs and contact the number listed to verify the information.  

Property inspections

Sometimes it takes longer to take a property off the market. Make sure you drop in on those properties once in a while. These properties are easily taken advantage of and property managers have to deal with multiple evictions. It’s never a pleasant site to visit one of your properties after a few weeks only to discover squatters.

Consider installing cameras to monitor properties, especially ones that don’t have their own security like apartment buildings.  

Another option for properties like these is to invest in smart lockboxes. While the pricier option to be sure, these lockboxes grant you complete control over who you allow into your property. Control access from the mobile app. Create one-time, recurring or permanent codes for each smart lock.

Why Lockboxes are Worth It

Consider this – what if you could manage all the showings in your calendar from the comfort of your office?  Think of all the free time you would have to spend on acquiring and retaining clients.  

And it’s not just about your comfort - 70% of prospects actually prefer touring the property on their own to the extent that self showing properties receive 31% more visitors. 60% of all showings are now self guided tours.  

Given that leads also don’t have to choose from an existing showing slot in your calendar, they can book showings on weekends and even after business hours. For this very reason, properties with lockboxes actually go off the market sooner and have a shorter lead-to lease cycle.

Despite all the ongoing lockbox scams, the property management industry saw a growth of contactless showings by 120%. This is because the benefits of implementing self guided tours far outweigh the risks, which, can be easily managed with the right security measures.

Change the lockbox code often

If a scammer gets hold of a lockbox code, it makes it all the easier for them to gain access to the key and show the property to leads. Changing the lockbox code often is a necessary security step for all property managers.  

Even better is using a software like LetHub which makes code stealing impossible. LetHub issues a new one-time pin (OTP) to leads on the day of the self-showing. This code is also only sent to the lead’s verified phone number. This effectively puts an an end to all scammers who gain access to a property’s keys and rent it out to multiple tenants.  

Using blockchain technology

Blockchain technology is an example of tech that keeps on giving. It can be used to protect property listing data by creating an immutable and secure ledger that stores the details of the listings.  

This ensures that the original listing data cannot be altered or tampered with, reducing the risk of scammers copying and posting the ad as theirs. Additionally, the use of smart contracts in a blockchain can automate the process of verifying and transferring property ownership, further enhancing the security and reliability of the listing data.

Watermark photos

Make sure any property photos you upload are watermarked to prevent scammers from using them for their own fake listing ads. Property managers now integrate with Zapier to set up automated workflows so they don’t have to do this for each property manually.  

Google Drive → PowerTools – Watermark property images uploaded to Google Drive

Use signage on all your properties – Signage on your properties is usually a deterrent to scammers looking to rent out your property. Make sure you add the phone number and the method of communication you use to communicate – e.g. specifying that you don’t use WhatsApp or Facebook etc to contact leads.  

Leads who have reported the scam without falling victim to it completely usually get suspicious after viewing the signs and contact the number listed to verify the information.  

Property inspections

Sometimes it takes longer to take a property off the market. Make sure you drop in on those properties once in a while. These properties are easily taken advantage of and property managers have to deal with multiple evictions. It’s never a pleasant site to visit one of your properties after a few weeks only to discover squatters.

Consider installing cameras to monitor properties, especially ones that don’t have their own security like apartment buildings.  

Another option for properties like these is to invest in smart lockboxes. While the pricier option to be sure, these lockboxes grant you complete control over who you allow into your property. Control access from the mobile app. Create one-time, recurring or permanent codes for each smart lock.

Why Lockboxes are Worth It

Consider this – what if you could manage all the showings in your calendar from the comfort of your office?  Think of all the free time you would have to spend on acquiring and retaining clients.  

And it’s not just about your comfort - 70% of prospects actually prefer touring the property on their own to the extent that self showing properties receive 31% more visitors. 60% of all showings are now self guided tours.  

Given that leads also don’t have to choose from an existing showing slot in your calendar, they can book showings on weekends and even after business hours. For this very reason, properties with lockboxes actually go off the market sooner and have a shorter lead-to lease cycle.

Despite all the ongoing lockbox scams, the property management industry saw a growth of contactless showings by 120%. This is because the benefits of implementing self guided tours far outweigh the risks, which, can be easily managed with the right security measures.  

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Author
Hibah Khan

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