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In this first instalment of Borrower Beware, CMI looks at common rental scams, including red flags to watch for and valuable advice you can offer to help protect your clients. 

In any broker/client relationship, adding value beyond the scope of your standard services is a highly effective way to create loyalty, generate referrals and cultivate a pipeline of prospective clients. For mortgage brokers, this can include educating clients around other important personal finance matters. Creating awareness around potential financial scams is a good example.

The volume of online fraud incidents in Canada is rising quickly. In 2021, there were 67,970 reported victims who lost over $381 million dollars, according to the Canadian Anti-Fraud Centre. As of July 2022 that amount was already sitting at more than $284 million for this year. 

One widely known fraud scenario is in rental scams, where someone looking to rent a home or apartment ends up giving money to a fraudster instead of a landlord, and is out both the cash and a place to live. 

Spotting a rental scam

In a typical rental scam, a fraudster entices interest in a property with a highly attractive rental listing and a low price. The fraudster posts ads on popular sites like Kijiji or Facebook and uses photos to make the listing look authentic. They may pose as a landlord and claim to be unable to meet to show the place in person. After a few emails or text messages, they ask for a security deposit, followed by advance payment on future months’ rent in exchange for a discount. They often use high pressure tactics to secure the deal by saying that there is a high level of interest in the property. If the deal seems too good to be true and there is no attempt at tenant screening, alarm bells should go off. 

The Canadian Anti-Fraud Centre classifies this type of scam as a merchandise or ‘non-delivery’ scam. In case after case, victims across Canada were looking to rent a home or apartment but fell victim instead. While this scam is not new, the incidence rate has increased significantly since the onset of the COVID-19 pandemic and social distancing, and further fuelled by the housing market surge of 2021. According to a recent report from Vancouver-based rental platform, suspicious listings have tripled in the past year, and variations of the scam are emerging, as would-be renters try to protect themselves from previously known fraudulent tactics. 


Steps to protecting yourself

An ounce of prevention is worth a pound of cure. Advise clients to take these steps, as recommended by Canada’s Competition Bureau, to ensure a rental listing is legitimate:

  • Go to the address and view the property yourself. 
  • Use Google Maps to view the location and compare it with actual images of the rental property.
  • Research the address to ensure it is not a duplicate post.
  • Do a reverse image search to determine if the pictures used in the listing were used elsewhere. 
  • Schedule a showing and meet the landlord in person.
  • If the rental is in a new development, contact the builder to confirm ownership.
  • Request and carefully review a copy of the lease.
  • Ask to speak with previous tenants.


Where to go for help

With all of this info at hand, your clients will be well equipped to navigate the rental market with confidence. If, despite their careful diligence, your client falls victim to a rental scam, this step-by-step resource will guide them through exactly what to do.   

Whether it’s your client conducting a vacation rental search, their university-age child looking for a place to live away from home, or a friend looking to rent while accumulating a home down payment, taking the time to share this information can go a long way to helping ensure a successful outcome. 

Not all private lenders are created equal. Experience the CMI Difference and learn why we’re the preferred partner of brokers across Canada. Submit your deal today.


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