It's October, so I wanted to talk about something that's spooky, scary, and keeps me up at night. It should keep you up at night too. Income documentation.
I'd love to tell you this is rare. It isn't. We screen applications every day, and altered paystubs and other income documents come across our desk more often than most landlords would guess. The one I'm about to show you came in just this week.
Two paystubs arrived with an application, and neither was real. Someone had modified them. I walked through how we caught it in the video above, and I want to lay it out here so you can do the same.
Two things you can catch with your own eyes
This one was a relatively easy catch. Both red flags were sitting right on the page.
The year-to-date numbers don't add up. The first paystub showed year-to-date earnings of roughly $31,000. The next consecutive paystub showed a pay period of about $3,100, which should put the year-to-date total around $34,000. Instead, it jumped to about $40,000. I'm not great at math, but that doesn't work.
The bank account doesn't match. The paystub listed the last four digits of the bank account the pay was deposited into. That didn't match the bank account listed further down the same document.
If you only check one thing on a paystub, check that the year-to-date total grows by the right amount from one pay period to the next.
What you can't see with the naked eye
Not every fake will be this sloppy. Since we screen applicants every day, we run every income document through a scanning tool. It checks for things that aren't visible to the naked eye, and that's where the better fakes get caught.
On this one, it found three things. It highlighted the parts of the document that had been changed. It flagged that the file's internal structure didn't match a known payroll format. And it showed the PDF had been created with a free online editing tool. I don't know many payroll companies that run their paystubs through a free online tool.
Put together, that's enough to say the document was modified. We declined the applicant, and we had solid documentation to back up the decision. That protects the property and the owner.
What to do going forward
- Compare year-to-date totals across consecutive paystubs.
- Check that the bank account details match everywhere they appear.
- Look at the file's metadata, or use a scanning tool, to see what software created the PDF.
- Apply the same scrutiny to every document in the application, not just paystubs.
If you self-manage, the biggest risk is assuming it won't happen to you. A fake paystub that slips through can mean a resident who can't pay the rent, and you won't find out until the first late payment. Checking takes a few minutes, and it's much cheaper than an eviction.
Quick disclaimer: I am the managing broker at BTS Properties, not an attorney. This is for educational purposes, so definitely run your specific screening criteria and denial process by your legal counsel!
If we can be a resource, don't hesitate to reach out. You can find us at btspeoria.com, or give us a call at 309-431-2469. Have a great Halloween!
