A growing number of letting agents lack full confidence in client money safeguards, with AI revealed to be the biggest threat.
More than a third (36%) of letting agents are not completely confident that their business could identify a fraudulent or suspicious client money transaction before funds are transferred, according to research by The Letting Partnership.
The survey found that 35% have experienced or identified an attempted financial fraud or scam connected to their lettings activity within the last 12 months.
Some 54% of respondents believe that letting agents are now more exposed to financial fraud and scams than they were three years ago, while just 8% believe exposure has reduced.
Phishing and impersonation of landlords or tenants was the most commonly encountered type of attempted fraud or suspicious financial activity, cited by 26% of respondents, followed by suspicious third-party rent payments (21%).
However, AI-generated fraud, impersonation and deepfake scams ranked third, having already been encountered by 18% of respondents.
Despite ranking third for reported suspicious activity, AI-enabled fraud was identified as the biggest financial security threat facing the sector going forward, selected by 29% of respondents.
This placed it ahead of other more traditionally common scams such as tenant and payment fraud (27%) and money laundering or suspicious funds (12%).
While 64% of respondents expressed complete confidence in their business’s ability to identify a fraudulent or suspicious client money transaction before funds were transferred, 36% did not.
Chris Mason, chief operating officer at The Letting Partnership, says: “The fact that more than a third of letting agents aren’t completely confident in their ability to identify a suspicious client money transaction before funds are transferred should be a real concern, particularly when over a third have encountered attempted financial fraud in the last year alone.
“The emergence of AI-enabled fraud is making the threat increasingly sophisticated, and it’s telling that the industry already considers it the greatest financial security risk moving forward, despite more traditional forms of fraud remaining prevalent.”
