Fake pay stubs are falsified financial documents that show an income that is not real. They may look very similar to an actual pay stub and be virtually indistinguishable from the real thing. However, they do not represent any real money the applicant receives from their employer. Technology has made it easier than ever to create fake financial documents that look authentic, so landlords should be on the lookout. If a tenant needs to use a fake proof of income to qualify, chances are slim that they will pay rent on time.
Tenants typically make fake pay stubs because they cannot meet the financial qualifications of the landlord. There is no reason to risk submitting fraudulent documents if you can legitimately qualify for an apartment truthfully. So, tenants tend to use fake pay stubs because they don’t make enough money to qualify or if they don’t even have a job. Some tenants believe they can get approved for an apartment using fake pay stubs and rent a nicer apartment than they can actually afford.
For instance, say you own a luxury building and require tenants to make 40x the annual rent. A tenant may try to get approved using fake pay stubs to get into the apartment but struggle to afford the monthly rent. So as a landlord, it’s important to be aware that fake pay stubs exist and learn how to look for red flags.
Some tenants get away with using fake pay stubs because landlords fail to verify them. While it isn’t always easy to identify a fake pay stub, you can confirm their authenticity in a few ways.
1. Cross Reference Against Other Financial Documents
In addition to pay stubs, you should also ask for other financial documents such as W-2s, tax returns, and bank statements. If all the documents are legitimate, they should all be fairly consistent. For instance, if the pay stub is real, you should see whatever post-tax income is listed on the document deposited into their bank account at a regular interval.
Plus, their year-to-date earnings should also be pretty consistent with what is listed on their W-2 or tax return. There are legitimate reasons why certain items may not match up entirely, for example, if the tenant has some of their income deposited into a retirement account instead of a checking account or they recently changed jobs or got a raise. But if the numbers are all over the place and don’t seem to add up, it may be a sign that the pay stubs are fake.
2. Confirm with the Employer
Another way to confirm the legitimacy of a pay stub is to contact the employer and verify that the information is accurate. On the application, ask the tenant to provide their current employer’s name and contact info, so you can reach out to them with any questions. You will also likely want to request an employment letter listing the salary or hourly rate of the applicant, along with the company’s contact information. If you send the company an email or give them a quick call, most employers will gladly have their accounting department confirm the legitimacy of the pay stubs.
3. Look for Typos or Inconsistencies
One dead giveaway of a fake pay stub is typos and inconsistencies. Fake paystubs will often feature swapped letters such as O’s in place of 0’s or mixed-up acronyms like YDT instead of YTD. This usually occurs if the applicant did a sloppy job doctoring the paystub themselves or they bought it from a shady source. Any legitimate company would not make these mistakes on a pay stub, so if you notice any misspellings or mistakes, it should be cause for alarm.
4. Double Check the Math
Another obvious sign that a pay stub is fake is if the math doesn’t add up. So, if you think a pay stub may be fraudulent, crunch the numbers and see if they make sense. For instance, if you multiply their hourly rate by the number of hours they work per week, it should add up to their weekly pay. Their weekly pay should also equal their net pay plus any deductions, and their year-to-date gross should also equal their year-to-date net plus any deductions. If any of these calculations don’t add up to a nice, rounded number, it’s either a fake paystub or the company needs new accountants.
As a landlord, it’s crucial to know that fake pay stubs are out there so you don’t get fooled. Although it can be challenging to spot a fake pay stub at first glance, it gets easier once you know what to look for. Confirming the document’s legitimacy and accuracy may require more research and due diligence. But it can save you from approving a deceitful tenant who will likely default on the rent.