How to recognize fake pay stubs

As a listing agent, your primary responsibility is to protect your client's interests, which includes ensuring that prospective tenants or buyers are financially qualified to lease or purchase a property. Unfortunately, the rise of sophisticated software has made it easier for individuals to create fake pay stubs, putting some of your client’s best interests at risk. In fact, according to The National Multifamily Housing Council (NMHC), 93.3% of apartment owners, developers, and managers have reported experiencing some type of fraud within the last 12 months. Rental application fraud in particular, can cost landlords $4.2 million or more. 

So what do you do when a tenant with questionable intentions attempts to mislead you with fraudulent documents? Learn how to spot fake pay stubs to avoid ending up with a tenant who is less financially secure than they claim to be. 

How to spot a fake pay stub

When you review an applicant’s pay stub, pay attention to these key factors. 

Formatting inconsistencies

Be wary of varying fonts, misaligned text, or inconsistent spacing, as these could be signs a pay stub has been tampered with. Be sure to verify any company logos, names, and contact information included on the document. If the logo appears incorrect, outdated, or the company details don’t match what you find online, the document could be fake.

“Perfect” numbers

Authentic pay stubs usually include precise figures, such as $1,523.47, rather than rounded amounts like $1,500.00. Additionally, if the standard tax deductions, including federal, state, and Social Security taxes are missing or appear inaccurate, these could be signs of fraud. Lastly, check to see that the year-to-date (YTD) totals align with the pay periods. If the totals don’t add up or seem mathematically inconsistent, it’s not a good sign.

Os used in place of zeros

Individuals creating fake documents are more likely to miss small details like when the letter “O” has mistakenly been used in place of the number “0”. Official pay stubs are generated using professional payroll systems that rely on automated software so this kind of error doesn’t happen. 

Verify the employer’s information

If you're suspicious of the applicant's employment information, research the company online and verify that the address and phone number matches the one on the pay stub. You can also always call the employer listed to confirm the employee's position, salary, and pay frequency. 

Missing information

Does the pay stub include detailed information such as the employee's full name, address, Social Security number, pay period, and pay date? If not, it could be because the document is fraudulent.

Generator markings

Some fake pay stubs may have subtle indications that they were created using an online generator. Look for any small print, URLs, or other telltale signs that might suggest the document wasn’t issued by an employer. Overly simplistic or unprofessional designs are also reasons to be cautious.

Strategies to combat fake pay stubs

It’s not always easy to differentiate a fake stub from a real one just by looking at it but here are some preventative measures you can take to prevent falling victim. 

Educate yourself on common fraud indicators

Familiarize yourself with typical red flags like the ones we’ve mentioned above. Remain vigilant and stay up-to-date on the latest scams and trends in document forgery. 

Request multiple forms of income verification

Don’t rely solely on pay stubs. Instead, ask for additional documentation such as bank statements, tax returns, W-2 forms, or direct deposit records. You can also request a Form 4506 from the IRS to see a potential tenant’s federal tax record transcript so you can cross-check the information provided.

Use a professional verification service

Consider employing a third-party service like RentSpree to verify an applicant’s income. With RentSpree income verification, you can validate the authenticity of pay stubs by cross-referencing an applicant’s reported income against their actual bank account statements. 

Use property management software 

Some property management software include automated verification features that can flag suspicious documents for further review. These systems use algorithms to detect irregularities that might otherwise be missed by manual inspection. 

Establish a policy for handling suspected fraud

A clear policy for dealing with suspected fake pay stubs should outline specific procedures, such as pausing the application process, notifying the applicant, and reporting the incident to the relevant authorities. You may also want to consult with legal counsel when you encounter a fake pay stub to ensure that you handle the situation properly and in compliance with local laws and regulations. Not only will this help protect your business from potential legal repercussions but it will help you appropriately address fraudulent activities.

Promote transparent accountability

Communicate to applicants that income verification will require multiple forms of documentation and may involve direct contact with their employer. This transparency helps deter individuals from submitting fake documents and can also encourage applicants to be honest, reducing the likelihood of fraud. Inform them that providing false information has serious legal consequences, reinforcing the importance of accuracy and integrity in the application process.

The bottom line: Always thoroughly vet income

As rental application fraud attempts continue to rise and the sophistication of online software keeps advancing, fraud protection is more important than ever. Always do your due diligence and run a credit check, background check, and eviction check to get a holistic understanding of your applicant. 

With RentSpree income verification, you can rest easy knowing the income details supplied on an application are authentic and accurately reflect a candidate’s financial status. Create your free account to see RentSpree income verification in action today. 

FAQ’s

Do all pay stubs include the same information?

Pay stubs can vary in appearance depending on the employer. However, they generally contain similar essential details, including:

• Gross wages (income before taxes)
• Tax deductions (federal, state, local, Social Security, and Medicare taxes)
• Miscellaneous deductions (such as insurance, 401K contributions, etc.)
• Net pay (the amount received after all deductions)

Can a bank confirm a pay stub for a landlord?

Banks typically do not offer verification services for pay stubs on behalf of landlords. The most reliable way to confirm the authenticity of a pay stub is to directly contact the candidate’s employer.

Should I report a fake pay stub to the authorities?

If you wish to pursue legal action against a tenant who has provided a fake pay stub, you can file a report with your local police department and present the pay stub as evidence. This report can be used, along with the fake pay stub, as supporting evidence in any subsequent legal proceedings.

What are the consequences of accepting a fake pay stub?

Accepting a fake pay stub can lead to approving an unqualified tenant, which might result in missed payments or other financial issues. It can also expose you to legal risks if not handled properly.