Verifying information through a third-party source is an essential part of processing rental applications.
But what if that third-party source is commiting fraud along with the applicant?
When people think of fraud, they usually associate it with notorious criminals such as Bernard Madoff or Charles Ponzi. However, fraud is not limited to these larger than life figures. It can come from unexpected sources, such as an applicant’s loved one, a family member or a friend. And when that happens, it’s much more difficult to detect.
What is Sympathetic Fraud?
Sympathetic fraud involves committing fraud in the name of helping someone obtain housing they may not otherwise qualify for. This type of fraud poses a significant threat to both sophisticated investors and "mom and pop" investors alike because it is hard to detect. The losses resulting from sympathetic fraud can come in the form of lease violations, damages, and evictions.
1. Fake “Legitimate” Paychecks
We’ve all heard of applicants using fake paycheck generators to create realistic paycheck PDFs. But what if an applicant involves a sympathetic friend or family member who can create a legitmate paycheck or check stubs for the applicant? These documents may be on company stock or even via their legitimate paycheck provider. But many times, the total income magically meets or exceeds the applicant's requirement for a position that normally wouldn't generate this amount of income.
2. Fake “Legitimate” Hire letters
Sympathetic fraud does not always happen with small locally owned businesses. There are cases where sympathetic friends of applicants that are HR Managers for large companies commit fraud. These fraudsters cannot easily produce a paycheck for the applicant, but a Hire Letter is a different story. This fraud is even more difficult to uncover as the screener may get stonewalled when trying to verify the information at a big company.
3. Fake “Legitimate” Verification of Rental History
Finally, the most common form of sympathetic fraud is verification of residence fraud. The "VOR" links that many screening companies provide are not useful as they do not include information about the landlord's relationship to the applicant.
It is essential to use other tools available to verify as much third-party information as possible to determine if the applicant lived in the places they claim to have lived.
In conclusion, you need to know the triggers to spot these common cases of sympathetic fraud and have the expertise to verify the information through multiple third-party sources. Without these tools and techniques even some of the most experienced providers may end up with unemployed or underemployed residents.