Fake pay stubs are the epitome of fraud in the rental application process. They are a fraudster’s best friend and an apartment manager's worst nightmare. Bad actors using fraudulent documents pose a financial, legal and potential safety risk to communities. Moreover, advanced technology has made it easier than ever for ill-intentioned individuals to exploit the system.
During the Apartmentalize 2024 session, “Beware of Fake Pay Stubs,” panelists shared their frontline experiences with fraud and discussed measures to combat it by verifying income in fair and reliable ways.
Data presented in the session revealed that 93% of property managers have experienced fraud in the past 12 months, a 40% increase from the year prior. Panelists cited multiple reasons for the influx in cases of fraud, including housing affordability, individuals reeling from the pandemic and simply an increase in bad actors.
“Combating fraud is a constantly evolving job, it’s a giant dance going back and forth with fraudsters,” said Chris Loebsack, Managing Principal for Loebsack and Brownlee, PLLC. “Every time we find a new fraud tactic and a way to stop it, they come up with another. Types of fraud are getting extremely sophisticated and in the legal world, it's about gathering the evidence and convincing a judge you are indeed dealing with fraud.”
The session covered multiple types of fraud, such as third-person fraud, identity manipulation and first-person fraud. However, synthetic fraud, which involves falsifying documents such as pay stubs, is the most prevalent, accounting for 85% of fraud. To better diminish cases of fraud, panelists said multiple requests for identification throughout the process can go a long way.
“A lot of this fraud could be reduced just by asking for an ID at multiple points during the resident journey,” said Patricia Daly, Consumer Engagement and Risk Specialist for MRI Software. “That way they’re not only having to show verification of employment, but their personal identity to match. It's a great way of overcoming false documents.”
Having gone through their own instances of fraud over the course of their careers, panelists noted how easy it is to fall victim to rental fraud and the subsequent impact it has.
“Nowadays anyone can download payroll software and create these documents there,” Daly said. “We had a case in Texas where there was a service that falsified documents and sold them to people. It is just so easy for them to do.”
To prevent future fraud, panelists recommended requesting payroll and banking links or using tech-driven documentation fraud detection solutions. Unfortunately, 73% of rental fraud is detected after a resident moves in. When that happens, panelists encourage operators to contact their legal consultants and be thorough in their documentation and investigations to ensure a smooth eviction process if necessary. However, to prevent it from getting that far, panelists said that training associates on the basics of fraud detection and how to spot signs of deception is the best line of defense.
“On the training front, we tell our associates to never accept photos and screenshots and to request the physical documents,” said Stephanie Jackson, Sr. Vice President for RAM Partners, LLC. “We also stress to them that it’s all in the details. If something seems off or odd about the documents, they are most likely dealing with fraud.”
Andrew Ruhland is an account executive and content writer for LinnellTaylor Marketing.