Financial Red Flags and Scams to Watch Out For
When you are in a vulnerable position and seeking help, scammers see an opportunity. The world of housing assistance is unfortunately filled with bad actors who prey on the hopes of applicants. Knowing their tactics is the best way to protect your money and your personal information.
Scam 1: The “Guaranteed Placement” Fee
A common scam involves a website or an individual who promises to get you to the top of a waitlist or guarantee you a housing voucher for an upfront fee. They may charge you a “processing fee,” an “application fee,” or a “placement fee.” This is always a scam. Official Public Housing Agencies and legitimate federal housing programs do not charge fees to apply. They will never ask you to wire money, buy gift cards, or pay in cash to get on a waitlist. If anyone promises special access for a price, it is a fraud.
Scam 2: Fake Housing Lotteries and Phishing Schemes
Scammers create convincing but fake websites that look like official housing authority or HUD sites. They might send you an email saying you have been “selected” in a housing lottery and need to click a link to claim your spot. These links lead to forms designed to steal your personal information—your Social Security number, bank account details, and date of birth. Always be skeptical of unsolicited emails. Look for typos and grammatical errors. Most importantly, verify the website’s address. Official federal government websites will always end in “.gov.”
Costly Mistake: Failure to Report Changes in Income
This isn’t a scam, but it’s a critical mistake that can have severe financial consequences. When you receive housing assistance, you are required to report any changes to your household income or composition. For example, if you start receiving a new pension or a family member moves in with you, you must notify the housing authority. Some people worry that reporting more income will cause them to lose their housing. While your rent contribution may increase, failing to report the change is considered fraud. It can lead to you being terminated from the program and required to pay back thousands of dollars in assistance you were not entitled to. Honesty is always the best policy.
To protect yourself from scams and for consumer information, consult the Consumer Financial Protection Bureau (CFPB) and the FTC.
