Don’t Trust, Verify: Optimizing Your Income Verification Processes
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By Paul Willis |

7 minute read

Exploring advanced income verification methods are helping to stop fraudsters before they work their way into the building. 

An applicant seemed to have everything she needed to qualify for an apartment, but something felt a bit off to Richard Grover. The paystubs submitted by the applicant appeared authentic, identifying a reputable online pet retailer as the employer and easily surpassing the income threshold needed to qualify for a home. 

“After a day and a half, I finally figured it out,” says Grover, Senior Vice President of Compliance for Richman Property Services. “They looked like legit paystubs—they looked pretty darn good—but the applicant missed one item. All the check numbers were the same.”

With that, Grover and the Richman team were able to short-circuit an income-based fraud attempt, one of many the apartment world endures daily. Applicants have several creative means to inflate their actual income—or understate it in some cases—in an attempt to beat the system and qualify for an apartment home. These fraudsters, naturally, are the most likely to default on a rental agreement and lead to costly, time-consuming evictions. 

“We’re predominantly seeing manufactured paystubs, which are easy to get with the multitude of services out there,” Grover says. “People can purchase bronze, silver and gold packages from these services, which guarantee to get people approved for an apartment. We’re constantly combating these types of things, and no matter how well I train my teams to spot them, criminals are getting better. Every time I see something new, it’s always alarming how accurate they’re getting.”

In addition to paystubs, shady websites are dedicated to producing additional fake financial documents, such as W-2s and 1099s. Some services even go as far as to post the properties they’ve deceived on social media. 

“It’s a business out there,” says Manjit Sohal, VP of Product Management for Experian. “There are services that charge for these documents, and all you have to do is tell them what your income needs to look like. And it’s not as if these sites are hidden on the dark web—they’re mainstream. The problem continues to grow, making it that much more important to solve for.”

As such, the rental housing industry is pushing back. Advanced income verification methods are helping to stop fraudsters before they work their way into the building. They are also alleviating onsite teams from an intensely manual process—which involves the analysis and verification of W-2s, 1099s, Social Security checks, disability checks and other financial documents that must be aggregated into a total income. 

The effort to better detect fraudulent income information will be the focus of the upcoming session, “Don't Trust, Verify: Optimizing Your Income Verifi-cation Processes,” at NAA’s Apartmentalize in Atlanta, June 7-9.  Grover will be one of the panelists, and Sohal will moderate the session.

Getting ahead of the game

Morgan Properties is among the operators piloting income verification software in select markets. The Pennsylvania-based property owner and management firm had been experiencing many of the issues outlined above, as well as other creative methods from potential scammers.

“We also see cases where the submitted employment information isn’t quite correct,” says Amy Weissberger, Senior Vice President of Corporate Strategy for Morgan Properties, who will also be a panelist at the “Don’t Trust, Verify” session. “Pieces of the application may be falsified because the applicant no longer works where they say they work. Applicants will also inflate what they have in their bank account. Other times, it’s untraceable income—when they say they have two jobs and one is under the table so there’s no way to quantify their earnings.”

Applicants will sometimes claim a business bank account is their personal account, Weissberger says. These applicants are usually discovered at some point, but oftentimes it’s too late. 

“Usually, people who are trying to commit income fraud are going to move in and quickly go delinquent,” Weissberger says. “It’s not a case where a resident moves in and after six months they have an unfortunate change, like losing a job. These are the applicants that are trying to move in with the intent that they aren’t going to pay their rent.”

To combat this trend, Morgan Properties has been piloting income verification software for approximately one year. One of the primary benefits of the platform, Weissberger says, is using technology to assist onsite teams with the income verification process. It also helps good-intentioned applicants, in that they are enabled to complete an application from start to finish on their time, and decisions about whether they’re accepted for a lease arrive quickly. 

As an additional fraud prevention tactic, Morgan Properties is piloting an ID verification platform, which serves as a first step before income verification. If an applicant cannot successfully identify themselves, they are unable to advance to the income verification process. This tactic has helped deter fraud up front, Weissberger says, because many ill-intentioned applicants discontinue before they get through the application. Subsequently, the percentage of move-ins with potential fraud indicators has significantly dropped at Morgan Properties’ pilot communities. 

Morgan Properties also has a designated associate in charge of screening, and the company is constantly analyzing ways to optimize its fraud detection and ensure the correct flags are in place. While the fraud prevention tools make a significant impact, Weissberger urged operators to remain diligent in their fraud-monitoring efforts because additional flags can arise that aren’t related to income, such as those who have committed business fraud or have attempted to use another person’s identity. 

“It’s important for site teams to continue to do their due diligence, even when you add these products,” she says. 

Catching the reverse income frauds

While Richman deploys similar measures at its market-rate apartments, the Fla.-based operator also has a portfolio of affordable homes. At these communities, potential scammers often try to underinflate their income so they can qualify for an apartment that is significantly cheaper than a conventional unit. 

This also involves paystubs and fake employment, as some applicants have directed property teams to contact friends who masquerade as their bosses. Sometimes it can be difficult to catch affordable fraudsters until their first lease is nearing an end, Grover says, when their true income is discovered upon renewal. 

To counter income fraud in its affordable portfolio, Richman has an in-house compliance team that is well versed on the warning signs. This removes the task from the onsite teams. 

“On the affordable side, these communities run very slim financially as opposed to the big budgets of market-rate communities,” Grover says. “A fraud situation can be devastating to an affordable property. If one happens, it could essentially throw the budget off for the rest of the year.”

Richman does not use an in-house compliance team at its market-rate communities, but onsite teams are intensely trained to spot income fraud. Additionally, Richman has built in ID verification and income verification software into its property management system. The income verification platform requires applicants to log into their bank account and scans for deposits, then enables teams to cross-reference the numbers with the income information the applicant submitted. 

While a fraud situation might not be as cataclysmic to a market-rate community as opposed to affordable, overall monetary losses can be much higher. 

“If you can catch a fraudster at the beginning and mitigate losses, it’s huge,” Grover says. “At a market-rate community, you could experience upwards of $25,000 in losses if the eviction process takes several months.” 

The new roadmap

The advantage of using income verification during a resident leasing experience can be summed up in three benefits, according to Sohal:

  • “First is the increased accuracy in real-time, which means teams aren’t spending that three-to-five-day window gathering and verifying data,” says Sohal, who has an extensive background in developing products and technology for the property management industry.
  • The second benefit is the reduced burden on the leasing staff needed to verify income, he says. This allows owners/operators to focus teams on other value-added activities. 
  • And lastly, friction is removed from the application process. “When friction is removed, there is less chance of customer abandonment, meaning a much higher chance of converting that prospect to a resident,” says Sohal.

Sometimes, those inflating their income aren’t necessarily planning a large-scale scam—they genuinely believe they can effectively pay their rent even if they don’t meet the qualifying thresholds. Sometimes the reverse is the case, in which a qualifying renter is poor at paying rent. That’s why many operators are often incorporating an additional layer into their screening process: Rental payment history. The combination of ID verification, income verification and an accurate rental history could serve as the screening trifecta for operators moving forward. 

“Using the trifecta of verification systems in conjunction with your screening processes can greatly minimize risk,” Sohal says.

Paul Willis is a Content Manager for LinnellTaylor Marketing.


Want to Hear More?

The “Don’t Trust, Verify: Optimizing Your Income Verification Processes” session will take place from 10 a.m. to 10:30 a.m. on Friday, June 9, at Apartmentalize in Atlanta. It will feature Manjit Sohal of Experian, Richard Grover of Richman Property Services and Amy Weissberger of Morgan Properties. Register at