How to Spot Fake Pay Stubs [2023 Guide]

If you're worried about tenants submitting fake pay stubs for apartments, you're not alone. Unfortunately, paystub fraud is a real issue and causes stress and financial insecurity for several rental businesses.

Fortunately, there are ways to spot a fake pay stub and screen tenants to ensure they can afford your rent. From what to look for in a check stub to verifying income, here's how to safeguard your rental company.

What are Fake Pay Stubs?

Fake pay stubs are realistic-looking documents that include made-up income and personal information. People often create fake pay stubs to submit when applying for an apartment, credit card, or loan.

Why Do Applicants Fake Pay Stubs?

Prospective tenants may forge pay stubs to increase their chances of renting an apartment. For example, if they don't make enough money or have a stable job, a renter may falsify their check stubs to make it look like they're financially stable.

5 Ways to Spot Fake Pay Stubs

A renter might create a fake pay stub to try to appear as though they have a higher income than they actually do. This could be an attempt to meet your income requirements or negotiate a lower rental rate. They may also want to cover up gaps in employment or to conceal the fact that they are self-employed or have other irregular sources of income.

1. Swapped Letters & Numbers

Take a close look at the letters and numbers on your applicants' pay stubs. For example, the letter "O" may be in the place of the number "0." Or, you might notice the letter "I" and the number "1" are interchanged. Unlike someone trying to fake their pay stub, a professional payroll company won't make the same mistake.

2. Inconsistent Information

Conflicting information is a telltale sign that the check stub is fake. Ensure the tenant's legal name is on the stub and that all the math is correct and consistent.

There may be some exceptions, like a tenant who married and legally changed their last name. If there is a valid reason, ask for documentation or more information about the situation to verify the conflict.

3. Perfect, Rounded Numbers

It's rare to see a real pay stub with a perfectly round number. Instead of $2,500 per pay stub, you should see a number that looks more like $2,538.27 with taxes taken out.

If you're renting an apartment to someone self-employed, they may charge a flat fee per project that results in check stubs with round numbers, but you should ask for additional documents to verify their income.

4. Incorrect Sums

What's going on with the math in the paystubs you receive? Fake ones will have incorrect sums, such as a gross figure that doesn't correlate with the net pay number. The amount of taxes taken out may also look off after making calculations.

5. Messy Documentation

Messy, blurry, and smeared text are indications a prospective tenant is falsifying pay stubs. You might notice the data doesn't line up neatly or the information is only half-printed. The printing may also look blurry or have odd or mismatched fonts.

Use your gut. Pay stubs with information that looks off are likely fake pay stubs, and will require further investigation.

How to Verify Pay Stubs

The rental process usually involves income verification, but you may need more than pay stubs to complete it. Instead of relying solely on questionable check stubs, ask for at least two income and employment verification forms. With these in hand, you'll have an easier time spotting inconsistencies and fraudulent information.

Here are a few documents you can request during the rental application process:

• Employment Verification Letter: Ask your renters for an employment verification letter from their HR department or supervisor.
• 1099 Tax Form: Contractors and freelancers will not have W-2 documents but should be able to supply a 1099 tax form to verify their income.
• Social Security Statements: If a tenant collects social security, you can ask them to supply their forms to see how much money is coming into their bank account each month.
• IRS Form 1040: Instead of asking for a renter's full tax return, inquire about the 1040 form they fill out and send to the IRS when filing taxes.
• Court-Ordered Payments: A tenant may have court-ordered payments from a financial settlement or divorce that can prove their financial stability.
• Annuity Statement: Potential renters may have an annuity to draw from or a contract from an insurance company where money is invested and regularly distributed.

How to Verify Income: Additional Verification Methods

If you're still unsure whether you have the correct information or your tenant claims they don't have the documents you want, there are a few more verification methods you might consider.

Request a W-2

People who work a regular, consistent job will have a W-2 form from their employer. The income listed should be consistent, short of any commissions or bonuses that raise their base pay.

Contact Employer

One of the easiest ways to get to the bottom of suspicious pay stubs is to contact the employer listed on the pay stub. Beyond calling the company, search the number and the place of business on Google to check that it's a legitimate business.

Ask for Bank Statements

It's common for landlords to ask for bank statements from prospective renters. It offers a closer look into their financial health and ability to pay rent.

Run a Credit Check

Landlords can run a credit check on tenants under the Fair Credit Reporting Act. While you don't need the renter's permission, you do need a "permissible purpose," such as verifying information for housing purposes.

Verify the Legitimacy of the Payroll Company

You can also check the payroll provider’s information. For example, an ADP paystub comes from a professional payroll processing company with detailed information about wages, withholding, and benefits.

Final Thoughts

Fake pay stubs are a serious problem, but they don't need to derail your rent roll or business. With a little savvy and organization, you can verify income and financial stability while keeping undesirable tenants at bay. And if you're in need of more applicants you know you can trust, list your property on Apartment List today to find your next renter!