Important Steps You Can Take to Avoid Tenant Fraud

Over the past couple of months, COVID-19 has caused the U.S. job market to take a significant dive, erasing nearly all the gains that were made since the 2008 recession. The 2008 housing crash shook the economy for years. Tenant fraud increased as many applicants attempted to hide their poor credit scores, evictions, and low income. With the economic troubles caused by the pandemic, it appears that tenant fraud is again on the rise.

Important Steps You Can Take To Avoid Tenant Fraud

Given how long it took the economy to recover after the 2008 recession, it’s likely many people throughout the country will struggle with financial stability for some time. To avoid being taken in by fraudulent applications, it’s important to take a look at your current screening strategies and adjust them with tenant fraud in mind.

Reassessing traditional screening factors

Traditionally, past behavior has always been the best determiner of an applicant’s potential performance as a tenant. With COVID-19, we now have to consider factors that may be out of an applicant’s control, like nonpayment of rent, lower income levels, and lower credit.

For example, a survey of 1,160 landlords found that approximately 59% of them had at least one tenant request a partial or complete rent reduction in May. Many people have lost their jobs since the pandemic started in March, and financial aid, unemployment benefits, and the federal stimulus have only provided temporary relief. It’s still uncertain whether the relief efforts were enough to help consumers and the economy return to its pre-pandemic condition.

This makes selecting tenants more difficult than it was before COVID-19. How can you know that a tenant isn’t trying to take advantage of the situation, or that an applicant is being truthful? Here are a few things you should consider while conducting tenant screenings.


With social distancing still in place throughout the country, many companies have made the move to work remotely. This may make it more difficult to get ahold of employers or property management companies through their main phone line.

So, what’s to stop an applicant from giving you the cell number of a friend instead? There are a few steps you can take. If you’re interested in talking to an employer, verify your applicant and their reference on LinkedIn. Then go to the company’s website and find a corporate email address to send your verification request to.

For verifications from landlords or property managers, search public records to find the owner of the previous address. Does it match the name the applicant gave you? When you have them on the phone, say, “I’m interested in learning more about your rental.” If they don’t know what you’re talking about, they likely aren’t the landlord or property manager.

Or, you can save time with our tenant verification screening report.


Some applicants may attempt to provide fraudulent documents that make it appear they have more income than they do. The best step to take in this case is to request multiple forms of documentation. Consider changing your policy to include the following:

  • Driver’s license or another form of government-issued ID

  • Paystubs; however, these can be faked. Here’s what to look for on a real paystub:
    • The name, occupation, and DOB should match the information the applicant gave you.
    • There shouldn’t be any spelling mistakes.
    • All digits and decimal points should line up consistently throughout the document.
    • The paystub should look like it was generated through accounting software.
    • The letter “O” should look different than “0”.
    • If there are estimations or roundups on the paystub, they should be minimal. If they’re rounded to the nearest zero, that’s a red flag.
    • The paystub should be legible and easy to understand, no matter how small the company is.

  • Bank statement from the last 30-90 days
    • You should be able to match the deposit amount to the paystub details.
    • The amount they’ve paid for rent should match.
    • Check that they have a sufficient amount of money in their checking and savings balance in case their financial situation changes.
    • Their W-2 should match their information, pay, and employment information.

  • Background Checks
    Your criminal background check policy should stay the same, but be sure to:

    Double-check that spelling, DOB, and their SSN matches any documentation that the applicant gave you.

    Make sure that you’re following HUD guidelines and your local laws when running criminal background checks. You should take into consideration the type of crime they were convicted for, how long ago it occurred, and whether the applicant poses a threat to your other tenants. Don’t create policies that completely ban those with a criminal history.
  • Eviction
    Most areas of the country have implemented an eviction ban during COVID-19, however, you should still check to make sure there were no pre-pandemic evictions.

  • Credit Reports
    Credit scores are important, but make sure to check the following on your credit check:

  • Monthly debt payments
    What is the applicant’s total monthly debt? How does that compare to their total monthly income? Will they be able to afford their debt payments in addition to the rent? Those with lower monthly debt have a larger safety net in case their income becomes impacted by the pandemic.

  • Collections
    Check to see if they have any recent collections for utility bills, apartment complexes, or payday advances. If so, did they occur before the pandemic? Applicants who were having financial issues before the pandemic are a higher risk for defaulting on their rent.

  • Loan payoff dates
    When is the applicant expected to pay off their car loan or student loan? Those who are closer to their loan pay off date are more likely to have additional income freed up in the future.

  • Loan deferments or forbearances
    Look for any deferments or forbearances and check when loan payments will become due again. According to the CARES Act, creditors are required to report accounts that have had payment accommodations applied to credit bureaus. An accommodation could be any type of relief, including agreements to make partial payments, forbearances, or to modify the loan. These accommodations are only applicable for agreements made between January 31, 2020 through July 25, 2020, or 120 days from the date the national state of emergency is over.

Essentially, you should continue screening your tenants but make sure to pay close attention to the details – and stay vigilant about the potential of attempted fraud. It’s likely you may encounter increasing numbers of applicants over the next year who have employment gaps, missed payments, or lower credit scores due to COVID-19. Having accurate information will allow you to make the most informed decision possible.

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