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Tenant Screening

How to Spot Fake Pay Stubs

December 2, 2023

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Managing Fake Pay Stubs

One of the most important steps in a tenant screening process is income verification. 

In property management, it’s critical to find renters who can pay rent on time and in full. 

Unfortunately, some potential tenants will go to great lengths to mislead you.  

If you aren’t able to identify fraud and weed out bad tenants, you could find yourself in a difficult position later. 

In this article, we’re going to cover how to spot fraudulent pay stubs. 

Spotting Fake Pay Stubs 

It’s important to mention that there isn’t a one-size-fits-all solution to this issue. Fake pay stubs can be quite convincing, and the red flags aren’t always the same between different falsified documents. That said, here are some key indicators to look for: 

Rounded Numbers 

One of the most obvious red flags is rounded numbers. Most pay stubs don’t end up with rounded numbers because of deductions like federal income tax or HSA contributions. If you see perfectly round numbers, that should immediately pique your interest.  

That said, it’s uncommon for someone trying to fool you to use rounded numbers. Most dishonest people know how easy this red flag is to spot.  

Presentation 

Accountants or Human Resources are typically responsible for pay stubs. It’s unlikely these professionals will create sloppy, convoluted documents.  

If you’re reviewing an applicant’s pay stub and notice incorrect small details or typos, be wary. Numbers and wording should be simple and easily digestible. Formatting should be uncluttered. Erros or inaccuracies are highly unlikely on professional pay stubs. 

Distinction Between 0’s and O’s 

This one is a minute but critical detail. Zeroes should be a little larger and oval-shaped, whereas capital O’s should be rounder. A professional accountant won’t confuse these characters so pay close attention if you see this issue crop up. 

Consistency 

Missing personal details is a massive red flag. Pay stubs and other official documents include information like a person’s name, address, and social security number. If the document is missing any of these or other key personal details, it’s fraudulent. Furthermore, some of these details are often in multiple places in legitimate documents, so keep an eye on that as well. 

Inaccurate Sums 

If you don’t love math, this one may seem mind-numbing. However, if earnings and/or deductions don’t add up, there’s a definite chance you’re dealing with a fraudulent document. 

Other Methods for Income Verification  

Pay stubs aren’t the only way dishonest applicants try to fake proof of income. If you’re not sure about a pay stub, you may ask for another verification document. Here are some additional options: 

Bank Statement 

Bank statements can provide sufficient evidence that someone will be able to pay rent in full. Steady deposits to an account are a great indicator that someone is reliable and will have enough money. And statements are a quick way to see if someone has less-than-stellar spending habits. 

This method of income verification isn’t always received well, though. Not every applicant is going to love handing over such a personal document. Pay stubs are a less intrusive way to get the information you need. You simply need to be aware of red flags because pay stubs are easier to falsify. 

W-2 Tax Form 

These documents show an applicant’s income from their previous tax year. They’re also much harder to forge than pay stubs. These documents list gross earnings, taxes, and deductions, which helps you determine if a potential renter can afford your rent and pay on time.  

Call the Employer on the Paycheck 

Some employers won’t confirm how much someone makes, but that doesn’t make this inquiry useless. You’ll still verify if someone was honest about where they work. Don’t use a number given to you by a potential renter if you can help it. It’s more useful to find a number for a company online and talk to the reference that way (this ensures you’re not talking to a potential tenant’s friend or family member acting as a reference).  

Social Security Benefits Statement 

The percentage of seniors who are renters continues to increase. A Rentcafe.com review of U.S. Census data showed that renters over 60 years old went up 43% in the past decade. This Benefits Statement can be a good way to see retired renters’ income and determine their ability to pay rent. 

Workers Compensation Letter 

If your potential renter got injured in a workplace accident, they’re probably receiving workers comp. Copies of a letter verifying this payment from the insurance company or the court can provide income verification. 

What to do if a Potential Tenant Cannot Provide Proof of Income 

Although it’s not as common, there may be circumstances where someone cannot provide proof of income (and faking proof of income isn’t their goal). A recently graduated college student is a prime example. In these instances, you should require a lease guarantor or co-signer if you still want to rent to them. You should also conduct a typical screening process to ensure they meet your standards. 

If you decide to reject their application, you may want to provide a rejection letter that explains why you’re doing so. 

Asking for Additional Income Verification 

How you ask for additional income verification is important. If you suspect fraud but can’t prove it, don’t accuse an applicant of fraud. Instead, it may be wise to communicate the issue tactfully, request additional verification, and set a specific due date for those documents to be turned over. 

An honest applicant may be annoyed but they’ll probably acquiesce to your request, especially if they actually want to live in your rental. On the other hand, someone trying to scam you will probably move on quickly. 

What to do if a Pay Stub is Fake 

If a potential renter submits a fraudulent pay stub and you know it’s fake, you can deny their application and pursue legal recourse. 

But what if you only discover the fraud after accepting their application? It’s within your rights to evict them. A fake pay stub invalidates lease agreements. After voiding the lease and going through the eviction process, you can sue them for legal damages. That said, if you want to take legal action, be sure to file a police report and hand over the fake pay stubs for evidence at future court hearings. 

A word to the wise: Seek legal counsel first if you discover a fake pay stub. You don’t want to inadvertently do anything illegal or hurt your chances of successfully suing a nefarious actor. 

Conclusion 

Spotting a fake pay stub early can save you tons of time and effort. So, it’s a valuable skill to cultivate. 

By using the tips in this article, you’ll be better equipped to protect your business and spot fraud. 

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