Hundreds of scammers are posting fake flat listings online to catch out would-be renters.
Scams are being reported to authorities at an average of one a week - though one company reports catching hundreds of fraudsters creating headaches on their site.
Of the more than 6600 profiles on nzflatmates.co.nz advertising a spare room or looking for a rental, 3.4 per cent are reported by fellow users as suspicious.
And Ministry of Consumer Affairs records show 70 reports of fraud caused by flatmate scams in the past 18 months.
Dylan Bland, spokesman for nzflatmates.co.nz, said it was often overseas fraudsters who listed non-existent flats.
The company uses specialist software to flag profiles where the rent appears too low for the number of bedrooms or other features on offer and also identifies the IP address of the user.
"IP addresses help us to identify where a profile was created. Nearly all cases of fraud originate overseas,'' Mr Bland said.
"Unfortunately the IP address method is not foolproof as there are means available to people for masking their IP addresses.
"We have considered in the past only allowing New Zealanders to use the site, however a lot of our members are students based overseas looking to move to New Zealand, so this isn't really an option.''
Most flatmate scams are reported during periods of high demand, like at the beginning of university semesters.
"The scammer will have an excuse as to why you can't see the property in person ... and will request you pay money and bond upfront in order to secure the room,'' said a ministry spokesman.
"In the end the property photos were fake, the flat is not available to rent and your money is gone.''
Emails from advertisers who listed fake Auckland properties in May show the deceit used to procure money.
One poses as a reverend on "a crusade in Africa'' who promises to post the property keys and documents to the interested renter.
Another says he is on a "Christian missionary transfer'' and needs someone to move in immediately.
He offers one month free rent if two months is paid in advance.
"Thanks and god bless you,'' the dodgy advertiser signs off.
"The majority of our members use the site as intended but like elsewhere on the internet the site is unfortunately targeted by people ... looking to defraud people,'' Mr Bland said.
"It's a real shame.
"Reports (of suspicious profiles) are reviewed and the profile removed where appropriate. An email is then sent to people who added that profile to their shortlist advising them that the profile has been removed on suspicion of fraud.''
The ministry said renters should never pay money until they had viewed the property with the owner present.
A guide to spotting fraudulent profiles can be found at nzflatmates.co.nz.