So Much Fraud in Rental Housing . . . But is ESA Fraud Something We’re Actually Creating?

By Judy Bellack, Industry Principal, The Pet-Inclusive Housing Initiative

Fraud is on the rise, as any rental housing operator knows only too well. With the digitization of many renter-facing processes, it has become very easy for bad players to game the system. According to the data gurus at Transunion, application fraud triggers rose from 10.3% in 2019 to 15.2% in 2020 alone – and those triggers remain high.

Fake IDs, application fraud, even fake pay stubs (have you seen the number of websites dedicated to creating a pay stub, good grief!) have operators implementing mitigation measures from specialty software to increased employee training and tighter policies. And it’s understandable; fraudulent activity can result in financial loss, increased bad debt and evictions, and even reputational damage. All quite expensive, and all through no fault of the operator.

But there’s one fraudulent activity that should give operators pause when it comes to the question of “why?” and that’s ESA fraud. 

Fraudulent ESA accommodation requests have become a big thing . . . with entire businesses born out of identifying non-legitimate requests. PetScreening cites that of 220,000 reasonable accommodation requests reviewed, nearly 60% were returned to the applicant as not meeting federal guidelines. 60%! (No small wonder, as pet-ownership in the U.S. stands currently at 66% of households.) That means site staff is placed in the unenviable position of turning away many applicants – or even asking a current resident to leave because a non-legitimate ESA has been uncovered. Why are so many pet-owners claiming an ESA?

This is not a difficult question. And the answer is the industry’s own policies on breed and size, not to mention the explosion of pet fees. Yes, renters are trying to get around these policies and fees by positioning their pet as an ESA. No, it isn’t right. But given how we all feel about our pets as members of the family, it’s extremely relatable and understandable.

Think about it . . . according to research conducted in 2021 by the Human Animal Bond Research Institute (HABRI), in the U.S. 54% of dogs are over 30 pounds. What is your weight restriction? 25 pounds? 30? 40? That range is generally where most communities have established their weight limits. And that means the average Golden Retriever, Labrador or Standard Poodle is denied access to the majority of rental properties. This, despite the fact that research shows that average damages are only reported in 9% of pet-owning units; and those damages average only $210. The average security deposit more than covers these damages – which, by the way, the above research also shows most renters will pay out-of-pocket rather than have this ding their deposit.

And then there’s breed. Most multifamily communities have between 10-15 breed restrictions. This one really has me shaking my head. The so-called general wisdom on this one is that certain breeds are more aggressive. But the science actually shows that not to be the case; factors like training and environment are much larger contributors to behavior. Experts discourage policy making based on breed, looking rather to individual behavioral assessment and history. And the sad reality is that breed-specific policies are filling our already-overcrowded shelters and creating heartbreak for both owners and their beloved pets.

Lastly, but certainly not least, are the many pet fees that have become the norm in our industry over the last five years. A separate refundable pet deposit, monthly pet rent, and often an additional non-refundable pet fee. Seriously? These are decisions that are simply not justifiable based on the data (again, damages average only $210) and can result in hundreds of additional dollars in housing cost for the renter. Let’s face it, rental rates have risen quite a bit over the last couple of years; these additional fees can sometimes create a true burden for pet owners who are also dealing with other rising costs and the challenge of finding a rental home that is affordable and accepts their large and/or breed-restricted pet. And given that pet-owners tend to stay significantly longer than non-pet-owners (see the research data and case studies from the Pet-Inclusive Housing Initiative), which dramatically decreases turnover costs including vacancy loss – aren’t these pet owners more than paying for themselves?

One may easily draw the conclusion that the rental housing industry is its own worst enemy when it comes to ESA fraud; due largely to policies that act as impetus for renters to find a way to keep their pets and avoid fees. Please consider reevaluating your pet policies toward more inclusion of renters’ pets – because trust me, there are a wealth of potential renters out there who do not see the industry as “pet-friendly.” We at the Pet-Inclusive Housing Initiative (PIHI) are here to help with data and resources to guide a smooth and successful transition to becoming pet-inclusive.

One final thought, and I’ll appeal to anyone who has ever had a pet in their life – aren’t all our pets supporting us emotionally? I don’t mean to be glib, it’s a serious question. The human-animal bond is a very strong reality. Our partners at the Human Animal Bond Research Institute have all the data you could ever need on the ways our pets enrich our physical, emotional, and mental well-being. I know my three crazy dogs make my life and my state of mind exponentially better.