In our last From the Trenches series, we examined fake pay stubs. Today, I am going to explore fake bank statements.  Are fake bank statements a big problem?  Absolutely.  In our most recent survey, Effects of COVID-19 on Residential Rentals, we found that 85 percent of property managers had been hit by lease applicants who supplied fraudulently altered financial documents, of which bank statements were among the two most commonly altered.  Further, property managers estimate that nearly a third (29 percent) of applications include fraudulently altered documents.

So, yes, this is a big problem.

It’s So Simple

Altering a bank statement turns out to be extremely simple. Peter Davis, a prominent forensic accountant, does an excellent job of detailing just how easy in his article Fraudulent Manipulation of Bank Statements in Electronic Format[1].

The net of Peter’s article is that nearly all bank statements come as PDF documents, and there are a wide range of tools that allow fraudsters to manipulate these statements. For example, Adobe Acrobat Pro and Adobe Photoshop make changing a balance of $102.14 to $360,102.14 simple. There are dozens of other tools that can alter PDF documents as well.

Further, there are many online services that will create a bank statement out of thin air. pdfFiller, Get Apartment Approval, Novelty Documents and Bank US all offer “novelty” bank statements guaranteed to “look official.” And while all of these say their documents are not to be used fraudulently, site names like “Get Apartment Approval” leave little doubt as to their true purpose.

In addition, a quick glance at Craig’s List in many urban areas shows many vendors willing to do the entire operation for the lease applicant.

In the end, it is clear that property managers have to deal with fraudulently altered bank statements.  The question is, how?

Don’t Expect the Banks to Help

Banks don’t like this kind of fraud, but there isn't much they can do. Davis reports that some financial institutions apply security features to PDF files, which can help to prevent manipulation, but usually that’s focused on investment accounts. And, in any case, the protections are easy to defeat. A fraudster can print the statement, then scan it back into a PDF document, and then—with all protections stripped away—alter to their heart’s content.

Protect Yourself

So, what can you do to protect yourself from these fraudsters?  Instead, try one (or more) of these simple safeguards:

·       Call the Bank. Do your own research. Get the phone number off the internet (don’t use the one the applicant helpfully provides, but which may be his roommate). Check the balance and a few other key figures. Of course, this only helps if the bank will answer your questions.

·       Do the Math. It is difficult to make all the numbers add-up without making a simple mistake.  See if you can catch those mistakes. It is time consuming but can help.

·       Look for Logical Clues. Does the applicant have a ton of cash, yet show over draught fees?  Does the statement show strange transactions, like ATM withdrawals with odd numbers (like $90.83)?

·       Font Mismatches?  Banks often use their own font, which the fraudster can only replace with something similar. Look for font mismatches.

We live in troubled times. Fraud is up, and the cost of fraud is skyrocketing. You need to stay alert and take precautions to avoid disaster. Hopefully, this installment helps with that.

Stay Tuned for our Next Installment