States Report Very Little Fraud Among Thousands of Applications for Rental Assistance

Many states are reporting few fraudulent attempts at filing federal rental assistance applications.

The U.S. Treasury Department said that they are monitoring various state programs for any potential fraud. While some states have yet to disclose reports on their programs, others have reported little fraud has occurred among filers, particularly rental assistance programs.

Arizona recently received nearly 8,300 rental assistance applications. In order to combat fraud, they use a computer program that verifies people's identities. This program resulted in more than 9,900 people being stopped from filing applications that could be fraudulent. California has also rigorously checked its rental assistance applications for fraud, resulting in 0.0036 percent of applications being rejected due to potentially false information. None of these applications were paid.

"All of those were detected pretty easily and early," said Department of Housing and Community Development director Geoff Ross. "We learned a lot from previous programs."

Most applicants suspected of attempting fraud sent in multiple applications from the same address. Others passed themselves off as both a landlord and a tenant.

States are also reporting a reduction in fraud in other systems. Utah is currently reporting that under 1 percent of applications have been fraudulent, with an even smaller number of those false applications being paid.

New York is another state reporting low fraud numbers. According to the New York Office of Temporary and Disability Assistance, "less than a fraction of 1 percent" of applications submitted are suspected of being fraudulent.

"While several instances of potential fraud have been referred to law enforcement for further investigation and action, and several other potential instances remain under review by OTDA and its vendor, there have been no final determinations of fraud made at this time," explained director of public information Anthony Farmer in an email to the Associated Press.

For more reporting from the Associated Press, see below:

After watching scammers make off with more than $20 billion in fraudulent California unemployment benefits during the pandemic, state housing officials were wary of a repeat when the federal government poured money into the state and told them to use it to pay off people's unpaid rent.

Geoff Ross, the agency's deputy director, said it was "mindful" of California's unemployment benefits debacle that has become the most expensive government fraud case in state history.

Congress approved trillions of dollars in aid during the pandemic—including more generous unemployment benefits and rental assistance—often leaving it up to state and local governments to get the money out the door.

For unemployment benefits, many states last year rushed to approve checks for millions of people who suddenly lost their jobs because of government shutdown orders. The frenzied approvals made it easy for criminals to file and collect on fraudulent claims in states large and small, even collecting benefits in the names of tens of thousands of state prison inmates.

Earlier this year, Congress approved $46.5 billion in rental assistance, and most states are distributing the first tranche of $25 billion. According to the U.S. Treasury Department, more than $10 billion has gone out through September 30, and officials credit that with helping avert a wave of evictions.

It's been difficult to determine if scammers are targeting federal rental assistance money nationwide with the same gusto they had while going after expanded unemployment benefits.

Unemployment benefit systems are much larger and more complex than rental assistance programs. In California, state officials have processed more than 25 million unemployment claims and paid more than $178 billion in benefits. By comparison, California has received just over 507,000 rental assistance applications and paid out more than $1.1 billion.

Unemployment benefits also have strict eligibility rules that require people to document their employment status every two weeks and confirm they are still looking for work—requirements that were temporarily suspended early in the pandemic but have since been reinstated.

Most rental assistance programs, while requiring proof of a certain income to be eligible, only require people to check a box certifying they have been impacted by the pandemic—something the federal government has encouraged states to do.

The rollout of the federal program was plagued early on by a lack of clear guidelines and later by burdensome rules that some housing advocates argued put too much emphasis on preventing fraud. Treasury tweaked the guidance and encouraged states to allow tenants to self-report their income and risk of becoming homeless, among other things, rather than requiring them to provide piles of documents.

State housing officials also benefited because they had more time to prepare. While agencies that handle unemployment benefits were suddenly overwhelmed by millions of claims at the start of the pandemic, state housing officials had months to get ready before the money came to them and people could apply for it.