Fake Pay Stubs and Employment Verification Exposed
Checking a potential tenant’s income and job is part of the screening process for landlords and property managers. After all, renting to someone who can’t afford the monthly rent can quickly become a financial mess. Over 93% of landlords have encountered fraud in the past 12 months, making the screening process more challenging than ever.
One of the main documents requested is a pay stub, but these days, it’s become more common for some people to create fake or altered pay stubs to trick landlords into renting to them.
This dishonest practice can put property managers at risk of financial loss if the tenant can’t pay rent, leading to challenges such as evictions and other issues. Being able to identify fake pay stubs can protect you and your client from these situations. It’s also a way to make sure that you only rent to qualified tenants with a proven income source that can consistently cover the rent.
If you don’t want to worry about identifying fake pay stubs and employment verification challenges, you can use Rentzap’s fully managed application underwriting service. If you prefer to handle the verification process yourself, it’s key to know the warning signs that may indicate fake, plus other ways to verify employment and income. Having this information can help protect your business from the risks of fake pay stubs and help you choose qualified tenants.
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Fake pay stub
A fake pay stub is a phony document made to look like real proof of income. Rental applicants who don’t actually make enough money to qualify for the property use it. These documents may seem legitimate at first glance, but if you look closely, there are usually signs that they are not real.
Nowadays, it has become very easy for dishonest applicants to get fake pay stubs. There are websites that generate pay stubs and services that create counterfeit ones. Some people may even create pay stubs online by using photo editing tools or design programs.
In some cases, an employer might assist a friend or family member by generating “real” paychecks, but that income is either unrealized or returned to the employer, a practice known as “sympathetic fraud.
While people may have different reasons for using fake pay stubs, they might deceive landlords into securing housing they actually can’t afford. This puts property owners at risk of losing money, and it hurts the integrity of the rental industry as a whole.
Different types of pay stubs
There are generally two main types of pay stubs: electronic and printed or traditional pay stubs. Let’s look at each of them.
1. Electronic pay stubs
Many companies have gone digital and give their employees electronic pay stubs. Electronic pay stubs are usually sent by email or accessed through an online portal or employee self-service system.
The great thing about electronic pay stubs is that they’re convenient. Employees can access them from anywhere, and there’s no risk of losing a physical copy. Plus, they’re often available before the actual payday, giving employees a heads-up on their earnings.
But electronic pay stubs can be easier to change or forge, so you’ll want to be extra careful when verifying them.
2. Printed or traditional pay stubs
These are the old-school paper pay stubs that employees get along with their physical paychecks. They’re typically printed on special payroll paper and contain all the relevant details about an employee’s earnings, deductions, and taxes.
Printed pay stubs may seem more trustworthy at first glance, but they’re not immune to being faked either. Dishonest people can create fake printed pay stubs using various methods like pay stub online services, so you’ll still need to watch out when verifying them.
One advantage of printed pay stubs is that they often have security features like watermarks, logos, or specialized paper that can make them harder to copy.
What information should be on a pay stub?
Ket things included on pay stubs include:
Employer information: At the top of the pay stub, you’ll find crucial details about the employer: company name, address, and contact information. As a property manager, verifying these details provides some legitimacy for the income source.
Employee personal information: This section includes the employee’s full legal name, home address, and social security number. This personal information ties the paycheck stub directly to that specific individual employee.
Pay period: Here, you’ll find the start and end dates for the specific period that the paycheck covers. This could be weekly, bi-weekly, semi-monthly, or monthly pay periods, depending on the company’s pay schedule and policies. For you as a property manager, verifying the alignment of the given pay period can be helpful. If the applicant recently started a new job, you can check that the dates line up with their start date. Or if there are any gaps between pay periods, it may need more investigation.
Gross wages: The gross wage number shows the total amount the employee earned before any taxes or other deductions. You’ll want to pay close attention to make sure the gross wages match up with the stated income and employment terms.
Tax withholdings: You’ll see separate lines for federal income tax withholding, state income tax, local taxes, Social Security tax (FICA), and Medicare tax withholding.
Benefit deductions: In addition to mandatory tax withholdings, you may see deductions on the pay stub for the employee’s benefit programs.
Spotting a fake pay stub
Noticing fake paycheck stubs is not a precise process, but there are several warning signs that property managers should look out for. By learning to recognize these red flags, you can greatly reduce the chances of rental fraud.
Appearance
One of the first things to check when looking at a pay stub is how it looks overall. Real pay stubs are usually well-formatted, with clear and consistent text styles, alignment, and spacing. HR or accounting departments usually create them to make sure that they appear polished and professional.
Fake pay stubs may look unprofessional or amateurish, with blurry text, misaligned parts, or sloppy formatting. These documents might be made by individuals without design skills or using low-quality software, resulting in a questionable appearance.
Round or unrealistic numbers
Another common sign of a fake pay stub is if it shows rounded or unrealistic numbers. Real pay stubs rarely have perfectly rounded numbers because deductions for taxes, health insurance, and other costs result in exact dollar and cent amounts.
If an applicant’s pay stub shows their earnings rounded to the nearest hundred or thousand dollars, that should raise suspicion. It’s highly unlikely that an employee’s take-home pay would consistently end up as such a neat, round number after accounting for all the various deductions.
Mixing up zeros and Os
A mistake often seen on fake pay stubs is using the number zero and the letter “O” interchangeably. These characters are always distinct on legitimate documents, with the zero appearing slightly taller and narrower than the capital “O.”
This seemingly minor detail indicates unprofessional document preparation. Professional HR or accounting software would never make such a basic mixing up of numbers and letters, as financial records could cause confusion and inaccuracies.
Consistency
Another important step is cross-checking the information on the pay stub with other documents the applicant provided. If details like the social security number, start date, job title, or employer name are inconsistent, it may indicate the pay stub is fake.
For example, if the pay stub lists a different employer than what was provided on the rental application or initial interview, that should raise a red flag right away. Similarly, if the start date on the pay stub doesn’t match up with the employment history the applicant stated, you may need to investigate further.
Checking with the employer
While the previous methods can help identify potential red flags, the most reliable way to verify a pay stub is by contacting the employer directly. If the applicant provided a reference or the employer’s contact information, reach out to confirm details like their start date, job title, and income.
Be sure to follow proper procedures and respect the applicant’s privacy when reaching out to their employer.
Other ways to verify income
Pay stubs are a common way to prove income, but relying only on them can put you at risk. To truly make sure you are renting to qualified tenants, it’s important to use multiple verification methods.
W-2 tax form
A W-2 form can be a useful supplement to pay stubs, giving a broader view of the applicant’s income over the full year.
Unlike pay stubs, which only show earnings for a specific pay period, a W-2 provides a more comprehensive picture of their annual income. Previous year W-2s should be used to confirm consistent year-over-year pay compared to the paycheck stubs being provided. Large increases or decreases in wages from a previous year to the current average income may also be a red flag. This can help identify any inconsistencies that may not be obvious from pay stubs alone.
For self-employed people or those with additional income, a 1099 form serves a similar purpose to report miscellaneous earnings. However, 1099 forms should never be used alone to verify income since the number may be substantially different than the applicant’s actual income.
Bank statements
Requesting bank statements can offer valuable insight into an applicant’s income and spending habits. Consistent deposits from an employer can prove steady income, while excessive or irresponsible spending may raise concerns about their ability to manage finances responsibly.
Bank statements can also reveal additional income sources beyond traditional jobs, such as investments, rental income, or side gigs. This can be especially useful for applicants who may not have typical pay stubs or W-2s, like self-employed individuals or those with multiple income streams.
Bank statements can also be fake, so it’s a good idea to cross-reference them with multiple documents for proof of income.
Social Security Benefits Statement
For applicants receiving disability, retirement, or supplemental income from Social Security, a benefits statement can provide their monthly income. These statements outline the specific amount the individual gets from various Social Security programs.
You can also compare this information with the other details provided by the applicant to verify authenticity.
Employment References / Income Letter
Another way to confirm the applicant’s job status and earnings is to ask the employer to complete an income verification letter or form. This information comes straight from the source and can reduce the risk of fake documents.
However, it’s important to note that these letters can be fake, too, so they should be part of the overall assessment but not the only thing to verify. Fraudulent applicants may provide false hire letters or employment letters.
Some employers may have policies or legal restrictions on the type and amount of information they can disclose about current or former employees. As a property manager, be aware of these boundaries and follow proper protocols when requesting employment verification.
Protect yourself and your owners with RentZap
Rentzap’s fully managed underwriting service helps protect property managers and their clients from application scams. We use advanced technology with the expertise of actual underwriters so you can confidentially accept qualified tenants without risking your business. Sign up for a demo and take the stress out of the rental application process.
Wrapping up on fake check stubs
In managing rental properties, you need real paystubs to verify a tenant’s income and employment. With more and more fake pay stub documents in the market, you’ll need to take extra steps to protect your business.
No single way of verifying is perfect on its own. Using multiple methods helps to get a complete and more accurate picture of an applicant’s finances. Trust your gut feeling, and don’t be afraid to look deeper if something doesn’t seem right.
Using a managed application underwriting service can remove the risks of rental fraud. Or, if you decide to do it yourself, update your screening methods and prioritize this part of the rental process to increase your success.
FAQ about fake pay stubs and employment verification
Is there software to detect fake paystubs?
Yes, there are special software programs to check if a pay stub is real or not. These programs compare details like employer info, pay period dates, and tax amounts against databases to find any mismatches that might mean it’s fake. For example, Rentzap uses artificial intelligence technology to validate the authenticity of paystubs.
Can banks detect fake pay stubs?
Yes, banks are good at recognizing fake pay stubs. They deal with different income documents all the time and can notice anything sketchy or inconsistent. Plus, many banks use software to verify if pay stubs are authentic.
Do pay stub generators work?
Yes. A pay stub generator automatically creates pay stubs based on inputted information such as employee details, gross pay, deductions, tax withholdings, and net pay. The generator uses predefined templates to format the pay stub. Users simply input the data, and the generator produces a professional-looking pay stub.
