Along with identity theft and deceptive practices claims, credit application fraud remains one of the top three risks dealers face today. Today’s consumers and identity thieves can surf the internet and create fake paystubs and other documents to support many stips from your finance sources on a deal, or support an identity theft, or both.
If your gut is telling you that ”something ain’t right,” listen.
The Federal Trade Commission (FTC) shut down three websites in 2018 that were selling fake documents that could be used as stips on a deal or identity theft. Even with this regulatory action a recent internet search for ‘fake pay stubs’ generated a list of 23 websites selling fake paystubs, tax returns, bank statements, and other supporting documents.
It is rumored that some of these websites are fronts for identity theft rings. After all, an unsuspecting consumer provides all sorts of personal, non-public information needed to generate these phonies. Some of these websites even have call centers to handle the verification of employment calls.
Unfortunately, the onus is on the dealership to vet the stips that are provided to support a transaction. The finance source expects you to review the paystub for accuracy and legitimacy when it asks for proof of income on a deal.
Tips for Vetting Paystubs
So how do you vet a paystub for legitimacy? While the following tips are not guaranteed to catch every fake paystub, they can certainly catch some of the phonies.
1. Vet the customer demographic information.
Many paystubs have the consumer’s demographic data such as address and social security number. Check this data against the same information provided on the credit app or during the sales process. You should also pull the dictionary off the shelf and check spelling.
2. Check the math.
Review the math on the paystub. Any columns or totals that do not add up correctly are a red flag.
3. Verify FICA deductions.
The FICA deductions are a fixed percentage of income. If your calculation generates a different result than reported on the paystub, you may have a phony paystub.
4. Become a decimal detective.
Look at the decimal points in a column of numbers. The consumer or identity thief likely used a word program to create the paystub, and the decimals might not line up correctly.
5. Check the text.
Legitimate paystubs use cold, non-descriptive fonts and are printed on thicker paper. A paystub using a flowery font or printed on low-grade, recycled paper may just be a fake.
6. Call employers.
Call the employer and ask for HR. Ask if the consumer works at the company. If HR won’t provide any information, hang up and call back. This time ask for the consumer by name and see if the receptionist inadvertently confirms employment. Use the same drill for the previous employer. Finally, look up the phone number yourself; the number the consumer provides may go to a call center or to a friend.
7. Confirm direct deposits on bank statement.
Ask for a copy of the bank statement covering the date of the paystub. There should be a deposit equaling the net-pay, especially if the paystub indicates ”Direct Deposit.”
8. Get copies of W-2 or tax returns.
While it is possible to fake a W-2 or a tax return, it is a much harder process and may require the identity thief to go back to the fake paystub website. Compare the info on the paystub to the tax return for consistency.
9. Rely on your finance source.
If you have any doubts regarding the legitimacy of a paystub or any other stip, simply send it to the finance source for a review. Many of them have access to software to conduct the review. With a thumbs up from the finance source, there should not be a future chargeback.
10. Trust your gut.
Call it intuition, call it ESP, call it trust your gut. It is that feeling that something might be awry. If your gut is telling you that ”something ain’t right,” listen. Thoroughly vet the documents and get your finance source involved. They want to make a deal as badly as you do, but they also want to manage the risk of default and identity theft.
Good luck and good selling.