Landlords Beware: A New Wave of Sophisticated Tenant Application Fraud
Fraudulent applications are nothing new in the rental industry.
For years, we’ve seen common tricks, like applicants asking friends to pretend to be landlords or tweaking pay stubs to inflate income. But in recent months, we’ve come across cases that are beyond anything we’ve seen before.
These days, fraudsters are using advanced tools like AI and high-tech editing software to craft fake documents that look frighteningly authentic.
And they’re not stopping there.
Some applicants are creating synthetic identities designed to exploit vulnerabilities in traditional screening processes.
We’re sharing our own recent experiences to help landlords stay ahead of this alarming trend. What we’ve uncovered raises serious concerns—not just about the sophistication of these scams but about how hard they are to detect without a trained eye and the right systems.
The Typical Tricks We’ve Always Seen
Before we jump into the new breed of fraud, it’s worth revisiting some of the classic scams we’ve caught in the past.
These might seem low-tech by today’s standards, but they’ve been irritatingly persistent over the years.
Fake Landlords and Forged Pay Stubs
Applicants often list fake landlord references, using a friend or family member to pose as their previous landlord. It doesn’t take much to create a convincing lie, which is why cross-referencing against property owner records is crucial to prove who really owns the property in question.
Pay stub forgery, on the other hand, escalated sharply during COVID-19.
Many people skipped employment during the pandemic, relying on unemployment benefits or other sources of income. To cover significant gaps in employment history, fraudulent applicants started editing PDF templates of pay stubs purchased online.
We began catching red flags when discrepancies emerged in matching pay stubs to applicants’ bank statements.
Some statements showed government unemployment deposits instead of payroll transactions from an employer. Typically, when we asked for clarification, the applicants disappeared. (No surprise there!)
But even these schemes were child’s play compared to what we uncovered recently.
The Rise of High-Tech Fraud
Recently, we encountered two cases so advanced they felt like something out of a crime thriller.
These applicants didn’t just fake one or two elements of their application; they created almost entirely fabricated personas.
Here’s what we found.
Forged Documents That “Add Up” Too Perfectly
Both applicants submitted meticulously crafted bank statements. These weren’t your average printouts with a few edits made on Photoshop. Every transaction, balance, and detail “added up” with uncanny precision across months of records.
However, we noticed something odd. The statement dates were perfectly clean—for instance, January 1–31, rather than the staggered billing cycles banks use. These minor anomalies, while subtle, signaled a professional forgery.
We suspect advanced editing tools or AI, like FraudGPT, were used to generate these convincing documents. Fraudsters are now using pre-designed templates to match the exact format of major banks like Bank of America, fooling even experienced property managers.
Note: Both of these cases used BofA bank statements, but it could very well extend to other banks, too.
Synthetic Identities and Odd Social Security Numbers
The Social Security numbers (SSNs) tied to these applications raised even more concerns. Both numbers were issued after 2011, but the applicants were in their 30s or 40s.
This immediately seemed suspicious, because the Social Security Administration implemented randomization in June 2011. Before then, SSNs were tied to geographic location and age, making it highly unlikely for older applicants to have “younger” SSNs.
Randomized SSNs, introduced to protect against identity theft, are now commonly used by fraudsters to construct synthetic identities. These synthetic identities combine real information (like stolen SSNs) with fake data, creating someone who doesn’t actually exist.
Another red flag?
Their credit histories were almost non-existent.
Both applicants’ credit reports listed a single trade line tied to a Discover Card with several years of history. This suggests they were added as an authorized user to boost their creditworthiness artificially, a tactic historically used in mortgage industry scams.
What This Means for Landlords
The sophistication of these scams should be a wake-up call for anyone managing rental properties.
Fraudulent tenants can cause untold financial damage—from unpaid rent and evictions to legal headaches. And the cases of fraud are on the rise, with property managers reporting a 40% increase since 2020. Roughly a third of all rental applications now include false information, and one 1 in 4 of these is caught during the screening process.
So, as these techniques continue to evolve, landlords need to be more vigilant than ever.
How to Protect Yourself
We’ve learned a lot from these incidents and have developed strategies to help landlords and property managers spot fraud before it’s too late.
1. Cross-Reference Pay Stubs and Bank Statements
Don’t take pay stubs at face value. Cross-reference them with bank deposits and examine statement dates. Be suspicious of documents where everything lines up too perfectly or billing cycles look unusually clean.
2. Investigate Social Security Numbers
Use credit screening tools to verify when an SSN was issued and flag any issued post-2011 that don’t align with the applicant’s profile (e.g., their age).
Randomized SSNs have no geographical or chronological ties, making inconsistencies easier to spot once you know what to look for.
3. Evaluate Credit Histories
Pay close attention to trade lines.
If an applicant lists only one or two accounts, especially tied to a lender like Discover, ask for additional documentation. Synthetic identities often rely on sparse but carefully curated credit profiles.
4. Stay Ahead With Technology
AI-powered verification software can help detect subtle inconsistencies in documentation and flag altered bank statements and pay stubs.
Consider verifying income directly by linking applicants’ bank accounts through secure protocols.
5. Train Your Team to Spot Red Flags
Fraud detection isn’t just about technology; it’s about awareness.
Educate your team to question oddities, like mismatched deposit patterns or vague landlord references. Fraudsters often count on rushed approvals or unchecked details.
Final Thoughts
Tenant application fraud has become more sophisticated than anyone could have imagined just a few years ago. These scams don’t just cheat landlords out of rent; they jeopardize the safety and stability of entire rental communities.
We hope the FBI and law enforcement are working to end scams like these, but in the meantime, vigilance is your best defense. By staying informed and implementing thorough screening practices, you can protect your investments and avoid costly legal battles with fraudsters.
Rest assured—we’re monitoring these developments closely and will keep you updated on any new threats we uncover.
Have you encountered a similar case of fraud? Share your experience in the comments below, and together, we can build stronger defenses against this rising wave of scams.