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Frank on Fraud

Fake PayStubs Are Tripping Up Income Verifications

Everyone wants to pretend they are rich when they are applying for a loan from a bank or lender.   And that leads to lots of lies about income on applications for credit.  1 in 5 applications for a loan contains material falsified claims of income.  Liar Loans are making a big comeback in our frothy real estate and lending market.  More people are lying, more often about their income.

Recently, the Washington Post wrote about here – Mortgage Fraud Wannabe HomeOwners is On the Rise.

Lenders Struggle To Cope With It

And lenders are struggling to cope with it. So they require borrowers to provide proof of their income – often with paystubs from their employers.

But paystubs are notoriously unreliable and that causes even more problems for lenders.  A case in point – many lenders are now finding that as many as 1 in 5 paystubs they receive for verification are forged!

Fake paystubs are wreaking havoc on lenders and banks fraud defenses.  Some lenders are reporting as many as 20% of the paystubs provided to them are fabricated – either forged or generated from online sites that promise realistic looking paystubs for less than $10.

The problem with paystubs as a verification method is that many lenders don’t even realize that it is occurring.   Their underwriters are blindly accepting that any paystub that crosses their desk is legitimate.

Paystubs are notoriously unreliable and banks and lenders mistakingly believe that these paystubs prove income.  They often do not.

I Decided to Investigate a Bit Further

I decided to look into forged paystubs a little bit more and here are some interesting statistics that I found.

#1 Finding – There are a Ton of Sites To Generate Paystubs

After a couple of days of investigation, I found that there were over 160 different sites on the internet where you could generate and buy a fake paystub.  Keep in mind, these sites don’t claim to be for fake paystubs but undoubtedly shady borrowers will frequent sites like this.

#2 Finding – On average sites will charge $4.99 but up to $15 per stub

Most sites out there will charge consumers about $4.99 per paycheck stubs but some that claim to offer “premium” stubs will charge as high as $15.

#3 Finding – The average time to create a Fake Paystub is 4 minutes

I purchased 15 paystubs as part of the investigation.  On average it took me 4 minutes to complete the input forms, pay and print out my fake paystubs.  They have made the process ridiculously easy.

#5 Finding – The paystubs all look the same – FAKE.

The most surprising thing of all is that of all 15 sites I visited all the paystubs look similar and they all have the same features.  Pretty much all the paystubs look fake.  They all look like they are created with Word templates using common table graphics.

Check out my fake paystubs.  They look fake right?

#6 – The Calculation of Taxes Are Usually Not Correct

The dead giveaway (beyond just looking like a total fake) is that the calculations for deductions and taxes are never quite right on any of the check stubs that I had created.  This is always a big red flag to lenders that do look for forgeries.

#7 – You Can Order Them With Verification of Employment Too

I was shocked at how easy it was to get a fake paystub, but I was stunned even more by how many offer verification of employment services and fake websites to completely fabricate not only your income but your employment.

This site is run out of Las Vegas and here is the form you use to request whatever you want – Jot Form.

#8 – It’s Not Just Paystubs These Sites Sell

Many of the sites I visited would also sell a variety of income verification forms including tax returns, W2 forms, and all sorts of other ways for borrowers to verify their incomes.  You really can’t trust anything anymore, can you?

The FTC is Cracking Down on These Types of Sites

The good news is that the government is starting to crack down on these types of sites.

Last month, the operators of websites that sold fake documents used to facilitate identity theft and other frauds have agreed to permanently shut down their businesses as part of separate settlements with the Federal Trade Commission.

The complaint against Moore and her business, Innovative Paycheck Solutions, alleges that she promoted the sale of a variety of financial documents on the website she operated, FakePayStubOnline.com. In addition to fake pay stubs, these documents included bank statements and profit-and-loss statements. The site stated that the documents look authentic and sold for as little as $40 for a fake pay stub to more than $150 for fake tax returns. The site offered visitors the choice to customize their documents and to edit real bank statements, touting its “Custom Fake Pay Stub” and “Fake Pay Stubs Online, Quick, Easy, Accurate Pay Stubs.”

All of these sites were affiliated which helps explain why so many of these fake documents look so similar to each other.

You can download and read the whole complaint here – katrina_moore-_complaint

Don’t Trust Paystubs

The moral of the story here is do not ever trust paystubs as 100% foolproof verification of income.  If you are not training underwriters or fraud analyst to spot fakes you are probably taking in thousands of fake paystubs a year and approving loans.

Get your analyst training and use technology that can better identify income fraud than using just paystubs alone.

Thanks for reading!

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