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You are reading: How to Identify Fraudulent Documents

May 20, 2024

How to Identify Fraudulent Documents

Kyle Nelson
Vice President of Strategic Partnerships

We all know that renting out your properties can be lucrative. However, the rental experience also comes with its share of risks.

One of the most significant risks for landlords and property managers is dealing with potential fraudulent documents from prospective renters. Fraudulent documents can lead to various challenges, such as lost rental income, property damage, and legal issues. In this article, we’ll review how to detect fraudulent documents and how you can protect your properties and investments.

Check out these eye-opening statistics

In the rental industry, document fraud has skyrocketed in recent years. Altered pay stubs and modified bank statements are more common than ever, leaving many property managers stressed and frustrated about how to combat this issue.

These “fake” documents are practically invisible to the naked eye. For instance, with the click of a button in a third-party software app, a prospective renter can tweak their annual salary from $45,000 to $145,000. Check out these recent tenant fraud statistics:

Get to know the various types of fraudulent documents

Forged documents

What are forged documents? They are files in which the details have been tampered with – in other words, fraudsters can fully alter information or partially tweak it. Examples of document forgeries can include placing timestamps or watermarks on files, adding and removing pages, and digitally altering signatures.

Invoice fraud

Invoice fraud is when an employee impersonates a vendor, creates a fake invoice, and sends it to a company that disburses funds directly to user accounts.

Fake IDs

Many fraudsters use fake IDs to set up false accounts and manipulate documents. To identify fake IDs, it’s critical to watch for the following: discrepancies between the photo and the prospect’s true physical appearance; typos or misspelled words; signatures that don’t match; expired birth dates; and incorrect security features. For example, fraud detection tools, like Snappt, can be used to spot fake documents before they even get through the screening process, saving time, money, and headaches.

Counterfeit documents

Some sneaky applicants may attempt to use counterfeit documents or unauthorized reproductions of official documents. The perpetrator’ then uses these reproduced files to gain access to additional confidential information.

Fake bank statements and pay stubs

When a fraudster is trying to get approved for an apartment, home or loan, they may try to alter pay stubs and bank statements. Property managers and landlords can screen for this by using the latest AI technology to determine if a document has indeed been manipulated.

How to detect fraudulent documents

By being proactive, property managers and landlords can significantly reduce the risk of falling victim to fraudulent renters and enjoy the perks of a dependable, trustworthy tenant pool.

Here are seven steps to consider before the ink dries:

First and foremost, educate yourself

Educating yourself about common fraudulent document practices can help you identify various red flags. Get acquainted with common fraudulent tenant tactics, like providing fake contact information for references. And be sure to stay up to date with the latest industry trends in document fraud to better protect your investment.

Screen prospective renters thoroughly

The initial line of protection against fake documents is to utilize a comprehensive tenant screening strategy and process. This process should include meticulous background and credit checks and employment verification. When a tenant knows you require a rigorous screening process, they are less likely to attempt fraudulent behavior from the outset. Also, ensure your apartment rental application clearly explains your requirements for proper documentation and background checks.

Verify information

When looking over renter applications and related documents, always go through and cross-check tenant information. Verify that the application details – think employment history, income, and former residences – mirror the information on the supporting documents. These documents can include paycheck stubs, bank statements, and references. Variations in any of these documents should be considered a red flag.

Request original documents

When collecting documents from applicants, always insist on original documents, including government-issued IDs, social security cards, and pay stubs. Fraudsters commonly hand over altered copies of these types of documents, but the original versions are more challenging to fake. You can also check for holograms, watermarks, and other security features on IDs to ensure legitimacy.

Verify employment and income

This is an essential element of tenant screening. Contact the applicant’s employer directly to confirm their job status, income and years of employment. Always exert caution if a prospective renter is uncooperative related to providing contact information for their employer. Trustworthy tenants should never have an issue with your verification process.

Check references

Contacting previous landlords and personal references is another crucial part of the screening process. Ask detailed, specific questions about the applicant’s rental and payment history, as well as conduct as a tenant. Fraudulent tenants may give you fake references that pretend to be former landlords. Always make sure to verify the authenticity of the references provided.

Use online tools and support

There are numerous digital tools and services available today that can help property managers and landlords verify prospective tenant information and identify fraudulent documents. Many apps and platforms offer tenant screening services that feature identity verification, credit reports, and criminal background checks. These tools can be valuable in helping landlords efficiently and accurately assess the legitimacy of renter applicants.

Ensure a more secure, successful renting experience

Identifying fraudulent documents from prospective renters is a critical skill today’s property managers and landlords need to protect their properties.

By implementing a thorough screening process, cross-checking information (and cross-checking again), requesting original documents, verifying employment and income, checking references, using digital tools and services, and staying up to date about the latest fraud tactics, you can look forward to a more successful – and secure – renting experience.

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