Hello everyone and welcome to Navigate's Tuesday Tip. I'm Pam and today we're gonna talk a little bit about how to prevent fraud and things that you can do to address it if you suspect it's going on.

Biggest thing to remember when you're talking about fraud is that fraud is intentional misstatement or withholding of material information in order to gain it advantage. So material information is necessary information. Things that you need to determine eligibility, things that would make a person in violation of the lease. Material information is important information.

It's not by accident when someone commits fraud. Fraud is an intentional act. But intent can be very difficult to document. So your best bet is to prevent fraud before it happens rather than having to deal with it after it happens. Documentable fraud is grounds for termination.

sources of fraud. So fraud can happen in a couple of different ways. You can have fraud engaged in by an applicant or a resident, and you can potentially have fraud that is engaged in by an employee. Both are important to prevent and to watch out for and address if you see it. When we're talking about resident or applicant fraud, some popular avenues for this include pay stubs. It is very easy to create a fake

pay stub these days, gift income because it's harder for us to trace gift income, self-employment where I am documenting my own income rather than that being shown on something else, any business activities that are conducted in cash under the table or in an undocumented fashion, tag sale income, things like if they're selling repeatedly items on eBay or

Pam Kazlauskas (02:05.704)
Facebook Marketplace or Craigslist and things like babysitting, petsitting, house-sitting. It is unbelievable.

Unbelievably easy these days to create a fake pay stub. If you do a quick Google search you will find multiple entities that for a fee will create a very realistic looking pay stub. You want to be looking for things that should be on a normal pay stub because very often there are slight errors or slight differences in what an actual pay stub should look like. Know what a pay stub from the major providers looks like. Know what an

ADP pay stub looks like or check systems or some of the other online pay stub providers or businesses that handle payroll for other companies. Know what those pay stubs look like.

You can go to, in most cases, those vendor websites and get information on fraud and what their pay stubs look like. Some of the things you want to look for are incomplete or inaccurate addresses or EIN numbers. So know what an EIN number should look like. Mismatched fonts, where most of the pay stub is in one format, but the address or the employee name is in a different font.

round numbers or missing deductions, so make sure you know what deductions are going to occur in your state, and math errors. If their pay rate doesn't match the total, that's a really good sign that that pay stub has been faked.

Pam Kazlauskas (03:47.174)
Fraud detection software is another avenue that can help you to prevent fraud. We don't recommend any particular provider or program, but there are some popular ones that include SNAPT, Acrolis, Heron Data, and Resistant AI. Again, we don't recommend any particular one, but you may want to take a look at some of these and see what services they provide. And depending on the amount of fraud

in the pay stubs that you see, may want to consider using one of these providers to help you prevent people from being able to use faked pay stubs. Do your own research, view demos and talk to the company staff to make sure you know what they can provide, what they can't provide, and any fees associated with the services, and discuss it with your supervisor to determine what may work best for you, or even if this is an expense that you think is

is worth looking into.

The biggest thing that you can do is educate yourself and your staff. There are various avenues for education. There's some free sources like the HUD Exchange, our Navigate Tuesday tips. There are some other companies that will provide free, you know, short webinars on things like fraud. So go ahead and look and find out what's out there. I would say also do your own research on the training providers to make sure that

the reputable, see what others in the industry have as experience with these particular trainers to make sure that you're spending your training dollars wisely.

Pam Kazlauskas (05:33.457)
When it comes to fraud by employees, very often the source of this is lack of education or training. They may think that it's okay to date a form for a resident or even sometimes to sign a form for a resident because they don't understand that that's fraud. It can also be stress or pressure. If they're facing performance deadlines for getting research done, they may just feel that

you know, they have to get something done and that can lead them to make some poor decisions or sometimes people have personal situations and challenges that can lead them to make decisions they ordinarily wouldn't. Remember that all suspected fraud must be reported immediately to the appropriate supervisory contacts, sometimes to regulatory contacts as well. Even if it's believed to be accidental, you

especially with employees want to make sure that you are taking that to the appropriate supervisory or HR contacts so that it can be looked into.

So accidental employee fraud. Some of the things you want to make sure that employees know is never ever ever fill out or predate forms for applicants or tenants. So like you can fill out on your form, know, name, address, unit number, but you don't want to be filling out answers to questions. You don't want to be looking at last year's form and just checking off the same answers. The applicant or resident should be filling out their own forms.

If they have a need for reasonable accommodation and assistance filling out forms, make sure that you are documenting that properly. If the issue that they have is limited English proficiency, make sure to follow your LEP plan in terms of what assistance you can provide. Many of us were

Pam Kazlauskas (07:40.049)
Facing a situation where we had lots of questions when the English only government policy came out, HUD has taken down their forms that are in alternate languages, but it's important to note that that does not change your requirements to have an LEP plan. It may change what you're able to provide because some of those forms now are not easily available, but you are still required to have your own plan in place for how you're going to handle

assisting residents who don't have a full English proficiency. So some of you may need to go back and look at your LEP plans and adjust them accordingly. Make sure you are documenting any resident request for assistance with forms. Make sure that when you are doing these things, it is explicit permission. This is what I am asking management to help me with. And make sure it's one time. Do not use open

permission to edit any form. It's a good idea that you have an acknowledgement that residents sign in these situations acknowledging that they know they are responsible for the information on the form even if they have asked you to help them get it in written form. So make sure that you're documenting everything.

Intentional employee fraud is when people know that they're doing something wrong, but something in their life is making them make that choice. Sometimes it's being overstressed and overwhelmed and feeling the pressure to get things done on time. And we all know what that feels like. Most of us have been in a situation where it's a heavy research month and we feel very pressured because we have a high number of research that need to be done at a certain time. They may fear getting in trouble and they

may see no harm in minorly fudging documents in order to replace something that was lost, say, or...

Pam Kazlauskas (09:42.567)
disgruntled employees may be intentionally taking negative action, but the overwhelming instances of what is considered fraud in an employee context is people that either don't understand or because of personal pressure make choices that they ordinarily wouldn't. So it's very important if you are feeling overwhelmed and stressed that you reach out for assistance and that if you're a supervisor and you notice

that an employee seems to be feeling overwhelmed, that you take appropriate action as per your company policies on how to handle them.

So the big things to do to prevent employee fraud, educate, educate, educate. Make sure people understand what they can and cannot do, what HUD requires. Encourage them to ask for help, to ask questions, and ensure need to know access to systems or information. If I should not have access to social security numbers and the information that's in your property management software, make sure that that access

access is controlled. That can also include things like making sure that your screen shuts off when you're away from your computer, making sure everybody is logging on to systems and don't share log-ons and passwords. Make sure you're terminating access to things like EIV and computer programs when an employee leaves, whether or not that's a positive part. When people no longer work for the company, their access should be terminated.

you

Pam Kazlauskas (11:24.14)
Institute an internal QA program and that's going to look like whatever you want that to look like. Some people do kind of a QA check that looks similar to an MOR but is internal and other people do it by periodic supervisor visits or whatever but institute a program by which you can track where things are at at different properties. Address any suspicious actions according to your company's policy for that.

And make sure that you have an adequate arm's length procedure for things like appeals, quality assurance, and anything else that needs to have the person doing part A of the task not be the person doing part B. For instance, the person collecting rent should not be the person that's doing the ledgers. There should be some separation. Notarization.

Most states prohibit notarization of items that a notary has a direct financial interest in. Now when I called my state to ask about that, it was a gray area. When I was on site, I had said, can I notarize things for somebody whose certification I'm working on? Now I don't have necessarily a direct financial gain, but since my job and my paycheck depends on

research, it's a gray area. So we strongly suggest that you do not notarize anything that is your certification. Anything you're directly responsible for, you should stay away from notarizing. It's best to avoid any appearance of impropriety even if you're not doing anything wrong.

never notarize, witness, etc. your own items and follow your company guidelines. So some key takeaways.

Pam Kazlauskas (13:24.87)
Some studies indicate that 80 % or more of rental properties have seen fraud to the tune of billions of dollars every year. So this is widespread and even if you don't think you've seen fraud, you're either early in your career and you will or it's happened but you haven't been able to catch it. So any education that you can get on what is fraud, how it happens, and how to prevent it is very valuable.

Remain vigilant. There used to be a saying, trust but verify. Have clear policies and follow them every time. Get as much training as you can. And use any appropriate tools that make sense for your company to help you track and prevent fraud.

So that is gonna do it for today. I hope you found those tips helpful. If there's anything in particular you'd like to see us cover, please let us know. You can email us, Vicki or I, both will handle these trainings. So that is ridiculous.

Pam Kazlauskas (14:39.161)
So that's going to do it for this tip. I hope you found these helpful. And you can let us know anything you would like to see by emailing either Vicki or me. Our email addresses are on the screen and we will see you on the next one.