As reported by the FBI, over 11,500 individuals fell victim to online property or rental scams in 2021, with total losses exceeding $350 million.
Vacation rental scams and chargebacks can be disastrous for you as a property manager or host, likely leaving you out of pocket or with costly damage to your listing. Sometimes, your reputation takes a hit too.
We’ll tell you how to dodge vacation rental fraud on popular OTAs and your direct booking websites. Plus, we’ll equip you with the tools and strategies you need to manage the risks of your vacation rental. Stick with us, and you’ll be laughing all the way to the bank!
10 Types of vacation rental scams
As a vacation rental host, you need to be aware of these popular vacation rental scams when accepting a reservation.
1. Fake IDs or stolen credit cards
Scammers using stolen or fake IDs to make reservations can sneak through your defences, leaving you with a heap of trouble.
To avoid this, consider verifying guest IDs before accepting a booking, ensuring you’re dealing with genuine travellers and not wannabe James Bonds.
Similarly, stolen credit card information is another trick that can leave you feeling like you’ve been pickpocketed.
2. Guest chargeback
Guests may dispute a legitimate charge after their stay, claiming they did not authorise the transaction or did not receive the services promised. Unfortunately, businesses only win around 32% of chargeback disputes.
Chargeback scams can be:
- Accidental – The guest doesn’t recognise the transaction on their bank statement, so they request a chargeback.
- Opportunistic — Guests spot an opportunity to get money back if they are not fully satisfied with their stay. They request a chargeback instead of notifying their host about problems with the property.
- Malicious — As the name suggests, a malicious chargeback is deliberate fraud, where guest intends to claim their money back after checking out. Use vacation rental guest screening as proof of guest staying in your property.
3. Taking over legitimate accounts
Vacation rental scammers may hack into legitimate user accounts on booking platforms and use them to make bookings.
4. Booking for a friend
Also known as “third-party Booking” is a type of vacation rental scam when someone books on behalf of another person and then cancels the booking, requesting a refund to a different account.
5. Making last-minute cancellations
Fraudsters book and then cancel at the last minute, often trying to exploit cancellation policies to get refunds or create disruptions.
6. Asking for a refund
Guests might claim that the property was not as described or that they were dissatisfied with their stay to demand a refund after their stay.
7. Security deposit scams
Guests may deliberately cause damage and then dispute the security deposit claims. Luckily, there’s a way around this type of scam – our damage waiver will cover all minor damages.
8. Phishing and social engineering
Phishing emails, those pesky fraudulent messages that disguise themselves as legitimate platforms, are like wolves in sheep’s clothing, always on the prowl for your sensitive information. They can be convincing, but don’t let them fool you into spilling the beans.
Similarly, social engineering is the con artist’s smooth-talking cousin, manipulating hosts into handing over personal or financial information or even access to the property. These scammers are like magicians, creating illusions to get what they want.
To outsmart these tricksters, always verify the source of emails and be sceptical of anyone asking for too much information.
9. Dollhouse scams
The Doll House is just what it sounds like—a house for dolls, complete with miniature furniture and interior design. Thanks to YouTubers Josh & Archie and a few clever photos, the pint-sized rooms passed all Airbnb checks and became one of the 6 million active listings on the vacation rental platform! Read more about Airbnb’s doll house scams.
10. Website scams
Website scams are where scammers will imitate your website or business, deceiving guests with vacation rental scams and listings and ultimately damaging your reputation as a business.
In the vacation rental industry, scammers often pull a fast one by taking a genuine property listed on an online travel agency (OTA) and copying the information to create a fake website and listing. This crafty con tricks potential guests into handing over their hard-earned money for a property the scammer doesn’t own or manage.
8 Popular rental scam red flags 🚩
With new vacation rental scams appearing daily, you should be informed and critical. The general tip here is to trust the spider’s sense when it tickles. Many of the rental scam red flags sound like a borderline acceptable situation and that’s why so many property managers and hosts fall for them.
Here are 8 red flags to look out for when guests book that will keep you hosting good guests:
1. Guest mentions the wrong house
Be wary of inaccurate property descriptions in your communication with guests.
For example, if the guest enquiring is talking about a city apartment and your property is a 5-bedroom villa, this could indicate they’re sending mass emails to property managers in the hope of catching someone in an Airbnb scam.
2. Books a last-minute stay
Scammers often take advantage of late bookings in the hope that you won’t have time to run effective guest screening and security checks. Does it mean you should get suspicious every time a guest jumps a bus?
It’s essential to run all your security procedures and confirm the guest’s identification, even for last-minute reservations so that you can prevent a fraudulent booking. With the right security measures and damage protection in place, you can confidently accept late bookings and improve your occupancy.
3. Make a one-night booking
Again, single-night bookings can sometimes, but not always, raise alarm bells for vacation rental scams and even parties. Guests who book for one night may also intend to commit other illicit activities within your listing.
However, there’s no need to turn down one-night bookings when you implement the correct risk management procedures. In fact, one-night bookings can also be a great additional revenue maker similar to last-minute bookings by filling gaps in your calendar.
For more information on how to calculate your vacation rental performance, booking performance and revenue, check out our latest article on the 10 best KPIs to track as a vacation rental host.
4. Requests to pay by cash, cheque, or wire transfer
The rental scam red flags don’t end in your inbox. Be extra cautious if a guest wants to pay by an unconventional payment method such as cash, cheque or wire transfer. It’s best to stick to your preferred payment method and use 3D Secure payments to make payments safer for you and your guests.
5. Gives wordy explanations, believable ones
Scammers might claim they don’t have pets, don’t smoke, don’t drink—basically, painting themselves as the “perfect guest.” This is a classic bait-and-switch, designed to lull you into a false sense of security while they plot their scam.
If an inquiry reads more like a novel than a booking request, with unnecessary details about their occupation or profession—especially if they’re keen to mention they’re a captain, religious figure, or military officer—take it with a grain of salt. A long-winded tale about why they’re visiting your city is another red flag. Keep these verbose visitors at arm’s length and remember, if it sounds too good to be true, it probably is.
6. Sends overpayments, not the expected ones
If a guest claims they’ve paid more than the total price listed on your website, it’s time to raise an eyebrow. Overpayment scams are a growing threat, with scammers often using stolen credit cards to pull off their tricks.
In this scam, the guest sends more money than the booking amount requires. Before you or your bank can catch on, the guest sends frantic messages asking for a refund on the overpayment. They might spin a tale about a travel department mistake, especially if they’re posing as a “business traveller,” when in reality, they’re using stolen information.
Sometimes the scammer sends a fake check or a transfer that won’t clear, leaving you reimbursing them with your own money. Often, these scammers dangle the carrot of extra money to lure you in. Don’t fall for it. If someone offers you more money than you’re asking for, stick to your payment policy and cut off all communication.
7. Uses bad grammar and spelling
A message that’s riddled with spelling mistakes and poor punctuation is a red flag waving wildly in the wind of potential scams on Airbnb. Now, we know you shouldn’t judge a book by its cover—after all, international travellers or renters who aren’t fluent in English might just have some bumps in their road of communication. However, a poorly penned message can still set off alarm bells.
If the person inquiring seems to have the language skills of a cat walking across a keyboard and keeps repeating themselves like a broken record, take a step back. Poor grammar could be a signal of an Airbnb scam.
8. Has an email address like ken123456@hotmail.com
Where you’re being contacted from can be as telling as a bad poker face. Ever heard of the email provider they’re using? If not, it might be time to raise an eyebrow. Make sure the guest’s name and email address make sense together. If it seems fishy, it probably is.
Keep an eye out for those sketchy email addresses that look like they were created by a cat walking on a keyboard—random capitalized letters, a mess of numbers, underscores, and a love affair with the letter “x”. Basically, anything that looks like a secret code from a spy movie. For example: “nxJyleqR_6MoDq@syg6.gidjex.com.” If it looks like gibberish, it might be a scam waiting to happen.
5 ways to prevent vacation rental scams and guest chargebacks
Avoiding vacation rental scams and chargebacks is complicated but not impossible. Knowing the right tools and strategies to help prevent vacation rental fraud is important so you can host confidently.
So, how do you go about protecting your short-term rental business? You must create a risk management process and build a portfolio of accurate listings.
Here are our 5 tips for avoiding vacation rental scams, Airbnb scams and chargebacks.
1. Create accurate listing descriptions
Vacation rental fraud prevention as a host begins with an accurate listing description, which will help to:
- Set expectations for your property
- Maintain your standards
- Attract the right guests
If your listing is true to your property, guests will not be able to claim later on that their stay was sub-par and that they were a victim of fraud. It will also make it easier for you to contest any guest chargebacks that occur.
Your listing should highlight your amenities, have an accurate and detailed listing description and plenty of high-quality photos of your property – consider hiring a professional photographer to help truly capture the essence of your property.
It’s also essential to keep up with all property maintenance. This will help avoid unpleasant surprises for your guests during their stay, which could lead to complaints, negative reviews and guest chargebacks.
2. Collect ID and screen your guests
Before accepting any booking, ensure you obtain genuine ID documents from your guests. This will help:
- Verify your guests’ identity
- Comply with local laws and regulations
- Streamline the check-in process
Most people cannot spot a convincing fake ID, so manually checking your guests’ documents is far from effective and not always the best option.
Instead, opt for short term rental ID verification that can scan and verify guest identification through biometric checks.
With Know Your Guest, you can capture your guest’s ID along with a selfie to confirm that all their documents are legitimate. In addition, our comprehensive Guest Screening and Sex Offender Checks will help you stay compliant with local regulations and keep troublesome guests and fraudsters out of your property.
3. Use 3D secure payments
3D Secure authentication provides an additional layer of payment protection between you and your guests, which monitors card activity and, if necessary, may request further authentication from the card owner.
Using 3D Secure makes payments more secure. You will be less vulnerable to chargebacks, and your guests will trust that their payment details are protected and that you are a legitimate business.
Also read about The importance of 3D secure payments for vacation rentals.
4. Secure your website
To reduce the risk of website fraud, you need to ensure your website is professional, trustworthy and reliable.
You should also implement a vacation rental privacy policy that tells visitors how you plan to use, distribute and store their data.
Getting your site SSL encrypted can also help improve your legitimacy and prove that visitors’ data will be handled safely.
5. Implement a damage protection plan
Unfortunately, there’s no way to make your short-term rental business 100% immune from vacation rental scams and chargebacks.
Even with the best prevention strategy, you can sometimes be caught off guard.
Implementing a risk management backup plan will help safeguard your business if something does go wrong, including costly guest damages, allowing you to continue hosting with confidence.
Know Your Guest’s Damage Protection Plan, can be used across all booking platforms, including popular OTA sites and even your direct booking websites.
Learn more about our Damage Protection Plan for short-term rentals.
Build your own risk management strategy
You can’t afford to let your guard down when it comes to vacation rental scams.
With a comprehensive risk management strategy, you’ll be able to:
- Spot potential fraud before it happens
- Know exactly who is staying in your property
- Say no to high-risk bookings
- Create a backup plan to safeguard your business and revenue
Know Your Guest will help prevent and protect you from vacation rental scams giving you peace of mind, confidence and a safety net in the instance something goes wrong.