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Vacation Rentals and Fraud

2015-06-18

Vacation home rentals have become a big part of the hospitality industry as millions around the globe rent their apartments to travellers. This arrangement works well for both parties when they are honest and upfront. However, owners and renters alike never know who's on the other side of the deal and both can potentially lose money in a fraudulent deal. As the adage goes, “On the Internet, nobody knows you're a dog."

On the Internet, nobody knows you're a dog

So, how can you avoid vacation rental scams and protect yourself against fraud?

We've all heard about vacation nightmares where a person is given an address and goes there to find a vacant space. In the young days of the internet, screening wasn't as straightforward and one couldn't simply visit a vacation home website, read reviews, or see the owner's online presence. Nowadays, there are hundreds of websites that feature genuine hotels, vacation homes, and rentals and put you in touch with experienced managers and supervisors who are accountable for your experience.

10 tips for travelers to avoid scam

10 tips for travelers to avoid scam

  • Only use your credit/debit card

Never use wire transfers, MoneyGram, or any other means of transferring money. Pay only with credit/debit cards to avoid potential problems.

  • Don't use PayPal

As good as PayPal is for e-commerce websites, it's actually never used by hotel or vacation home owners. Experienced hotel and vacation rental owners always ask you for a credit/debit card. If an individual hotelier or vacation home owner asks you to pay via PayPal, that's a red flag that they know little about the industry and may be out to scam you.

  • If possible, book directly with the owner

Most vacation accommodation providers work with aggregators and online travel agencies. The latter already control a big chunk of the market and are not going anywhere. To make sales, owners are forced to pay a commission to these partners. On average 90% of reservations are through indirect sales channels and only 10% are direct bookings. Because owners like when renters book directly, you can often find deals and little perks when you go this route.

  • Compare online travel agencies

If you're not booking directly, the next best option is using an online travel agency, which offers a lot to those who travel frequently to various international locations. Whereas most vacation home owners are doing business in one city, travellers can use these platforms so as not to be tied to a particular location. Choose wisely and see which one offers the best protection and loyalty programs.

  • Do not use free listing websites

Do not trust vacation rental listing on Craigslist, Gumtree, or any other classified advertisements websites. Because anyone can post an ad, there is absolutely no control over it, and that's okay as long as it's a small thing or something you can check upon before paying for. Familiarize yourself with the platform before accepting any deals.

  • Check policies for hidden fees

Most vacation rental websites like Booking or Expedia charge a separate cleaning fee, which is not counted toward the total price shown on their sites. Make sure you know what you're buying into before you whip out that credit card.

  • Check if the tax is included

Most websites will also not calculate tax in the total price and will simply indicate it elsewhere on the payment page. Again, know what you're getting into and don't be fooled by the price listed.

  • Pay attention to reviews

Reading reviews is an absolute must. While perusing reviews on a hotel/apartment website, keep in mind that it's in the best interests of a business to boost its online ratings. Reviews on Booking, Expedia, or Airbnb are more likely to be genuine. Make sure to read through several reviews before making your decision.

  • Carefully read refunds/cancellation conditions

When you pay for an accommodation online, you buy a set of conditions. One of those conditions is the cancellation policy. Be aware that free cancellation is not the same everywhere. Some allow you to cancel your reservation up to two days prior to your arrival, whereas others require that you cancel at least thirty days before arrival. Before making any purchases, also look into the returns policy. When asking for a refund, some places charge a fee for the first night only, whereas others charge for the whole duration of your stay.

  • Use common sense and trust your instincts

If something doesn't seem right, it probably isn't. Just because a listing is on Airbnb or HomeAway doesn't mean that it's necessary a genuine listing. Often times, booking websites do not always check all their listings because they lack the capacity to do so. And just because the owner has a legitimate-looking website doesn't mean that you can trust it. Carefully look things over and use your judgement when booking your stay.

10 tips for hosts to avoid scam

10 tips for hosts to avoid scam

  • Never accept cash

Scammers often use cash payments to get around the system. Even in cases where honest vacationers prefer to pay with cash, it's better to avoid this type of transaction, because you may not be able to recover costs in the event that there's damage to your home if there's no paper trail.

  • Do not accept PayPal

Same goes for PayPal. Even if guests pay for their stay, they may leave damages worth thousands of dollars, which will fall on your shoulders. 

Note: AirBnB accepts PayPal, but they have insurance plans in case guests make damages.

  • Accept credit cards

Accepting credit cards is easier than ever nowadays. You just need a stripe account and a short introduction to how the system works.

  • Don't ask for a wire transfer

Scam artists often ask for a wire transfer, so you should avoid losing potential customers by asking for this. Even if you have to pay commission, it's better to have guests pay with their credit/debit cards.

  • Properly screen your guests

Make sure that you do a proper screening of guests, even repeat guests. Just because guests book twice doesn't mean that they're necessarily not going to scam you or use your apartment to carry out shady business.

  • Reward your repeat guests

Provide repeat guests with discounts and leave small perks in the apartment for their arrival. People love to see that you value their business and have taken the time to show your gratitude.

  • Monitor your listings

Review all your listings on a continual basis to make sure that others are not creating fake listings using your images and descriptions and stealing your potential customers.

  • Make sure your listing looks genuine

When creating a listing, don't just copy and paste descriptions from others or use generic photos. Take the time to write out a unique description of your property. Then do a quick google search to make sure that your description doesn't look like a copy of someone else's. It's also important to take high-quality photos of the space. You don't need to use an expensive camera; a smartphone will do the trick.

  • Be ready for listing hell

There are hundreds of listing websites you can use, but not all of them work the same way. Some may transfer money to you via a wire transfer, whereas others may use PayPal, a bank transfer, or direct deposit. In some cases, you'll get your money as soon as the reservation is booked; in other cases, you'll have to wait until the guest checks out or at the end of the monthly pay period.

  • Create a rental agreement

Make sure your guests sign a rental agreement acknowledging that they will comply with all policies and will be held accountable for any damages. You'll want to also keep a signed copy of the rental agreement if situations arise that warrant action.

Author: Khachik Badeyan

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