LuxuryVillafinder.com Advisor: How To Recognize and Avoid Renter Scams

While scams in the vacation rentals world are rare compared to the overall amount of successful transactions, still the risk remains.  As an owner of a luxury holiday home, it’s best to take precautions to protect yourself from unscrupulous renters’ tricks.  Fortunately, there are only a limited amount of ways you may possibly be cheated.  Here, we outline a few of the tell-tale signs and one classic stratagem that villa rental owners may come across.

Signs of a Scam

• It seems innocent enough at first, but beware of any person booking your holiday accommodation who indicates that a third party will be covering costs, or they are a third party covering costs for someone else.  This could be, for example, a person stating they’ll be paying for some friends going on a honeymoon.  They may say something like UNICEF, the Red Cross, United Nations, their Company, or their Church Organization will be paying for their rental.  Most likely this is a scam waiting to happen.

• Whenever you hear that a stranger wants to pay for the vacation rental by check or money order but wants you to wire some of the money back, get your guard up.  It’s most likely a scam.

• Watch out for those attempting an arrangement for a Cashier's Check to be sent for an amount greater than the rental.  You might be asked to wire the difference to a travel agent who would handle the other details such as air fare, car rental, etc.  There is no legitimate reason why a renter can’t just send the funds directly to that third party who will be providing the service. 

• Beware of emails that show poor grammar, bad spelling, or an odd use of capital letters.  If possible, look closely at the email sender’s “header” to see what IP address location it might have come from.  Use an IP Lookup service (many are free on the internet) to see where they are actually writing you from. If something doesn’t seem right, or their information given doesn’t match up, it could be a scam.

• The scammer will give a sense of urgency to whatever the proposed transaction is.  There will most likely be some rush or hurry about the wire you should send back.

• Scammer often asks for your name, address, etc for printing on the fake check.

Why The Scam Works

These “advance schemes” work on the unsuspecting vacation rental owner because many do not understand the bank mechanics behind the foreign cashier’s check – but the criminals do understand it well and use a time element to get the best of you. 

In the US, many bank tellers will tell customers that bank drafts clear in 24-48 hours, but the banking reality is something different. The 1992 Federal Reserve Board Regulation CC stipulates that the bank is obligated make the funds available in you account in 48 hours.  So it is true that the money is available in your account.  But be forewarned: the check really has not cleared/bounced yet. 

The overseas cashiers check that you were sent may not actually clear for 30 days or more while it travels around in the international banking system!  Meanwhile, maybe you have spent the money.  When the cashiers check bounces (in other words, can’t be collected) you will be forced to come up with the cash and held accountable, and in some cases you can even be held criminally liable for the missing funds.

So, if the cashier’s check sent was greater than your rental charges, and at the request of the renter, you went ahead and forwarded the excess funds on to their colleague or that travel agent, (or any other person they specified needing your assistance)….They have managed to cheat you.

How It Works

Here are the basic mechanics of the scam:

1. You receive an email enquiring about availability or booking of the holiday let or villa rental.

2. The faraway person offers a cashier’s check that looks convincing (but it’s fake).

3. This cashier's check is given to hold the apartment for the specified dates, and the amount is usally “padded” to cover some type of expense they will need to pay in advance.

4. Typically, the amount of cashier's check is far more than the rental charges- the “renter” puts his or her "trust" in you to do something for them with this excess amount.

5. You’ll be asked to wire the balance via money transfer service to some third party.

When that check doesn’t actually clear later on, sadly, you will be held responsible by the bank who cashed the check for you.  You’ll also be out whatever funds you forwarded on to the scammer’s associate, AND maybe you lost booking weeks for the home that could have been rented to an honest party.

What You Can Do

Remember, www.luxuryvillafinder.com has tools in place to help you screen out potentially inappropriate renters before they even enquire about the home.  It is possible to indicate your Payment Methods, Renter Policies, and Preferences in your Feature Ad. 

The acceptance of Cashier's Checks does not have to be the only payment option offered for your foreign clients.  Upscale vacation home owners should ideally offer as many convenient payment methods as possible to their renters.  This might include securing a merchant account to accept credit cards (which works great for last minute bookings!).  Or, consider a Business Account with Paypal.

Bank-to-bank wires are a relatively reliable and secure method for both parties in the rental transaction to get the property booked.  However, wire transfers made to via Western Union, Moneygram, and the like, are not acceptable methods for owners to be paid a deposit for the rental!  Further, they are prohibited by www.luxuryvillafinder as payment method for booking the homes featured on the site. 

Why?  Because from the educated renter’s point of view, an owner pushing for these “anonymous” types of wire payments may indicate potential fraud or dishonesty.  Bank-to-Bank wires are good but not as ideal for the renter as credit cards or Paypal which offer the cardholder some level of protection should the rental be a fraud.

If credit card acceptance and Paypal just aren’t part of your business  plan and you don’t want to alienate honest foreign visitors who want to pay by cheque, there  is something you can do. You can keep your good faith foreigners, but scare off scammers by saying “no way” to foreign cashier’s checks and money orders with those "padded" amounts for more than the agreed-upon deposit. If you receive a check for way more than is owed, send it back (if there's even a return address!).

Also, a good practice might be to turn away anyone who wants to pay by a foreign Cashier's Check with less than 45-60 days between the receipt of the check and the guests’ reservation date.  How would you feel if someone paid you for a booking with a cashier's check, you cashed the check, the "guests" came and stayed in the home, and a month later you figured out the check was actually "no good"? 

Once you cash the foreign cheque, remember to hold on to those funds until you know have confirmed with your bank that the foreign draft was made good.  Hopefully before the guests are in that beach rental!

How We Can Help

We hope these rare scams never happens to you.  At www.luxuryvillafinder.com we are always interested to hear about other strategems being played out or suspicious emails our luxury property advertisers receive.  Please Contact Us with your suggestions, experiences, or helpful hints.  We will use your input to publish more articles like this one. In some cases, we may take the initiative to privately alert our advertisers to new and different schemes as they come along.