Optimizing your income verification processes.
September 18, 2023 |
Updated September 18, 2023
It’s no secret that fraudsters are becoming more sophisticated. Websites are dedicated to producing fake paystubs, fabricated IDs and additional altered documentation that can help nonqualified applicants get into an apartment home.
These applicants, naturally, are the most likely to default. That can lead to costly evictions, turn costs and legal fees.
Fortunately, the industry has the tools to fight back. Panelists discussed some of the ways to limit modern-day fraudsters—and perhaps cut them off before they get started—at the 2023 Apartmentalize express session, “Don’t Trust, Verify: Optimizing Your Income Verification Processes.”
“We all know market rents are climbing, and desperate times call for desperate measures,” said Richard Grover, Senior Vice President of Compliance for Richman Property Services. “So, people are coming up with any way they can to squeak into our properties, and that’s a problem in the industry.”
Richman’s portfolio consists of both market-rate and affordable housing, so the company observes fraud from both sides of the spectrum. On the market-rate side, applicants are aiming to overinflate their income via fake paystubs, altered bank account statements of fake employment verification. Additionally, they’ll aim to represent themselves as someone else, sometimes using synthetic ID, in which parts of real identities are combined to create a fictional identity.
On the affordable side, applicants will undersell their income in hopes of looking like they are below the financial threshold to qualify for a discounted home.
As such, Richman has built-in ID verification and income verification software into its property management system. The income verification platform requires applicants to log into their bank account, scans for deposits, then enables teams to cross-reference the numbers with the income information supplied by the applicant. To combat income fraud on the affordable side, Richman has an in-house compliance team that is trained to recognize the warning signs.
This removes the task from the onsite teams, which panelists agreed is the first step in any successful fraud-limiting efforts. They also noted that the various industry tools available will only be successful with an efficient game plan.
“Tech by itself isn’t a solution to limit fraud,” said Manjit Sohal, VP of Product Management for Experian. “It has to be accompanied by a process, and most often the process has to come first.”
Amy Weissberger, Senior Vice President of Morgan Properties, is well-versed on the types of old-school and new methods used by scammers. Overseeing a portfolio of 95,000 apartment homes, she’s seen it all.
“What I hear from our site teams is that people are using other people’s information, they’re using business accounts instead of their personal accounts to show an increased income, and they are getting increasingly good at creating fraudulent paystubs,” Weissberger said. “We also see cases from where parts of the submitted employment information is falsified.”
Morgan Properties has been piloting income verification software and an ID verification platform, the latter of which prevents applicants from moving on if they cannot successfully identify themselves. As such, the percentage of move-ins with potential fraud indicators has significantly dropped at the pilot communities. The company also has a designated associate in charge of screening and is constantly monitoring the changing environment for new types of fraud.
Fraudsters will continue to get better. But the industry will continue pushing back.
Paul Willis is a Content Director for LinnellTaylor Marketing.