	Background

The HCV program, administered by HUD, subsidizes housing costs for  low-income households in the private rental market. Because the demand for vouchers may exceed the supply  available to the local PHA, households that have already waited to  apply to the program may also wait years to receive a determination  of eligibility and receive a voucher. After receiving a voucher, households must find eligible private- market rental housing within a limited time frame. Various Reported Fraud Schemes against Housing Choice Voucher Participants Can Occur, but PHAs Reported Limited Incidents, and GAO Covert Testing Found Limited Online Indicators of Fraud

		Waiting-List, Rental, and Side-Payment Fraud Are among the Reported Types of Schemes That Can Affect Voucher Participants

Reported fraud schemes against program participants—including  prospective applicants, individuals on waiting lists, current voucher  holders, and landlords providing rental units—can occur at each point in  the HCV application and rental process, according to program officials  and our analysis of FTC complaint data. On the basis of our reviews of  fraud alerts issued by PHAs and complaints submitted to the FTC, the  type of fraud that participants, including older adults, may encounter  depends on where they are in the process and whether they are landlords  or renters. PHAs Are Aware of Limited Instances of Fraud Affecting Voucher Participants in Their Jurisdictions, with Side- Payment Fraud Reported Most Often

An overwhelming majority of surveyed PHAs did not report awareness of  any occurrences of most fraud types that could affect HCV program  participants, while those that were aware of fraud against participants  reported few instances, according to our survey results and interviews. We surveyed a nationally representative sample of PHAs representing  approximately 1.9 million households. 3). As noted above, side-payment fraud  involves agreements—mutual or compelled—in which the voucher holder  pays additional rent or other payments to the landlord in return for  benefits, to secure a rental, or to avoid eviction. Of PHAs reporting side payments, we estimate  that the vast majority (93 percent) were aware of 1 to 10 instances of side  payments in the prior year (spring 2016–spring 2017), with most reporting  between 2 and 5 incidents in the past year. According to PHA officials, fraud schemes generally have not targeted  older-adult HCV participants. Several PHAs issued fraud alerts about schemes against participants, but  officials at PHAs we interviewed about some of the alerts told us that  incidents of these fraud types were limited. Few Indicators of Potential Fraud Found in Online Covert Testing

In covert testing using undercover tools and techniques, we found no  indicators of fraud in rental advertisements posted online, and few  indicators of fraud in commercial websites offering information to  participants about the HCV program. None of the 26 commercial websites we covertly tested contained text  explicitly stating that they would place or move someone up a waiting list  for a fee. Apart from requiring that PHAs inform participants about a prohibition  against side payments to landlords (a program rule violation), HUD’s  antifraud guidance, as outlined in the Housing Choice Voucher Program  Guidebook, generally focuses on preventing fraud against the program,  as opposed to fraud against participants. See figure 4 for examples of HCV program- related fraud listed in the guidebook. In addition, PHAs share best practices that could include these and other  issues. For example, two industry associations representing  approximately 1,900 PHAs provide mechanisms for PHAs to share  information and best practices about HCV administration and issues  affecting HCV program participants and their communities. Appendix I: Objectives, Scope, and Methodology

In this report, we describe (1) the types of reported fraud schemes  committed against Housing Choice Voucher (HCV) participants (including  older adults), awareness by Public Housing Agencies (PHA) and other  relevant organizations of fraud incidents and how often they occur, and  indicators of such schemes online; and (2) antifraud regulations,  guidance, and informational materials, if any, that the Department of  Housing and Urban Development (HUD) and PHAs have in place to  identify and mitigate fraud against program participants. Consumer Complaint Data

We reviewed consumer complaint data from the Federal Trade  Commission’s (FTC) Consumer Sentinel database from calendar years  2011 through 2016.
Why GAO Did This Study

With the goal of providing safe, decent, affordable housing, HUD provides rental assistance to low-income households through its HCV program, administered locally by approximately 2,200 PHAs around the country. In fiscal year 2016, the HCV program received approximately $20 billion in funding and provided rental assistance to approximately 2.4 million households. Local demand in the program may exceed voucher supply, and individuals may wait years before receiving a voucher. After receiving a voucher, participants have a limited amount of time to secure a rental. Accordingly, PHAs have issued alerts about criminals targeting program participants with fraud schemes, such as by claiming to offer admission to the program for a fee.
This report describes (1) the types of reported fraud schemes against HCV participants, including older adults, PHAs' awareness of such schemes and their frequency, and indicators of such schemes online; and (2) HUD's and PHAs' antifraud regulations, guidance, and information related to fraud risks affecting program participants. GAO reviewed online fraud alerts and consumer complaint data from calendar years 2011 to 2016; conducted a generalizable survey of PHA officials about their awareness of fraud against participants; interviewed agency officials and experts; and conducted online covert tests of 350 rental ads and 26 commercial websites. GAO visited eight PHAs, selected based on size and location, among other factors.
GAO is not making recommendations in this report. HUD had no comments on a draft of this report.

What GAO Found

Public Housing Agencies (PHA) have reported various types of fraud schemes against Housing Choice Voucher (HCV) participants, including older adults, but were aware of limited instances of such schemes. Similarly, GAO identified few potential indicators of these schemes in online covert testing of rental ads and websites. According to GAO's analysis of fraud alerts and complaint data, the type of fraud participants may encounter—such as waiting-list, rental, and side-payment fraud—depends on where they are in the HCV process and whether they are applicants, voucher holders, or landlords, as shown in the figure below. For example, side-payment fraud involves agreements—mutual or compelled—in which the voucher holder pays additional rent or other payments to the landlord for benefits, for example to secure a rental or avoid eviction.
According to GAO's survey of PHAs representing approximately 1.9 million households, PHAs reported few incidents of the various fraud types, although side-payment fraud, a program violation, was noted most frequently. Specifically, GAO estimates that while 41 percent of PHAs were aware of instances of side-payment fraud in the prior year, most reported 2 to 5 incidents in the prior year. In addition, 3 to 10 percent of PHAs were aware of instances of the other types of fraud GAO identified. GAO's online covert testing also found few indicators of potential fraud. For example, some websites requested payment for information about the HCV application process, but none explicitly offered to do something prohibited by program rules, such as placing someone on a waiting list for a fee.
The Department of Housing and Urban Development's (HUD) and PHAs' antifraud regulations, guidance, and information largely focus on efforts to protect the HCV program. For example, PHAs are required by HUD to inform families of program-related fraud and abuse, including the prohibition against side payments. In addition, GAO found that several PHAs voluntarily provide targeted messages to participants about fraud schemes by outside parties. Through industry associations, PHAs have mechanisms through which they share best practices that could include these and other issues.