According to NMHC/NAA data, 84 percent of landlords were victims of at least one fraudulent income document last year. I am a believer.
I have found three phony pay stubs in the last six months. Two of the stubs were almost perfect. The only way I found the first one was that the employer had closed eight months earlier.
This clue-by-formatting approach is no longer valid. What is the solution to this situation that everyone is dealing with to prevent the issue from growing worse?
David, fraudulent income documents are definitely becoming more common. One of the best ways to reduce the risk is to verify income directly with the employer, request bank statements showing payroll deposits and use a professional tenant screening service that verifies employment and income. Strengthening your screening process is really the best defense.
Janice, I agree with your three instincts, but there is a gotcha with each of them.
Calling the employer: HR personnel won’t spill the beans on anything, including salary, unless it is to verify that you are employed there and what your title is. This is because of privacy laws. They won’t even discuss salary if they have to put it in writing.
Bank Statements: This is a gotcha because bank statements now have the same problem as pay stubs. The problem is that document fraud tools have become more sophisticated. Document editing is now fast. Snappt checked almost 5 million documents last year. The result was that 6.4% of rental applications were fraudulent, many of which were coming in via bank statements.
The answer to fraud is to directly connect to the bank to obtain income directly from the bank. This is via “open banking.” The data is not editable because it is not routed through the applicant. This is handled by Plaid, which services 85% of the US workforce. There are some services that handle tenant screening that offer this service. Consider looking for it when making comparisons.