Multi-step verification strategies are essential for property managers and tenant screening services that want to increase application completion rates while decreasing risk.
According to a recent survey by the National Multifamily Housing Council (NMHC), over 93% of apartment owners, developers, and managers have experienced rental fraud over the past year, with over 84% specifically seeing falsified paystubs, employer references, and other documents. As a result, they wrote off an average of $4.2 million in bad debt, with nearly a quarter of that sum attributed directly to application fraud.
This is no longer just a cost of doing business. It’s a full-blown crisis that’s reshaping the way top tenant screeners operate. As fraud has grown more sophisticated—with advances in AI making forgeries easier to generate and harder to recognize—forward-thinking screening services have been forced to fight back with equally sophisticated verification tactics.
Specifically, they’ve been turning to multi-step verification strategies, or “waterfalls”—a systematic approach that involves stacking a number of different verification solutions into a single flow. This creates multiple built-in checkpoints against fraud while reducing processing timelines and improving completion rates. In other words, it identifies more bad actors while also streamlining the application experience for legitimate renters.
In the best cases, all verification methods in the waterfall are delivered by the same provider, so screeners can enjoy the same breadth of verification options while simplifying their tech stack and provider management.
Below, we dive into what this waterfall strategy looks like in practice and how modern tenant screening services are using it to their advantage. But first, let’s examine the current state of the tenant screening landscape and why verification processes are so ripe for an overhaul.
The perfect storm fueling modern rental fraud
A few different factors have converged in recent years to fuel a surge in rental fraud.
For starters, the digitization of application processes—while offering undeniable benefits for renters and managers alike—has inadvertently opened up new avenues for deception. Nearly 70% of renters now submit applications online versus in-person, meaning screening companies face the challenge of verifying the authenticity of applicant data without a face-to-face interaction. Meanwhile, intelligent fraud tools have become widespread, from AI-powered document alteration software to online communities sharing fraud tips and techniques on public platforms and popular social media channels like TikTok and Instagram.
Adding fuel to the fire, economic pressures are pushing more and more applicants to desperation. With rental costs rising and qualification standards tightening, some applicants feel all but compelled to misrepresent their financial situation in the hopes of securing housing. The result? A vicious cycle where fraud drives up costs for everyone, making housing even less accessible for honest applicants.
Why traditional methods fall short
Most tenant screening services still rely on single-point verification methods like requesting proof-of-income documents, running credit checks, or phoning up an applicant’s employer(s). While these steps are necessary, they’re insufficient to root out advanced fraud on their own.
Today, uploaded documents can be skillfully forged, with up to 90% of document and application tampering going undetected. Employment verification calls can be redirected to a convincing accomplice. And credit reports are limited in scope, revealing an applicant’s past financial behavior rather than the current state of their income, employment, or assets. When these methods don’t yield answers, applications are typically pushed into a manual review queue. They can sit there for days or weeks, creating delays that frustrate legitimate applicants and often cause them to abandon their application.
Too often, traditional verification methods fail to catch deceptive applications altogether. Fraud is only discovered once the damage is already done: the tenant has already moved in, and the only recourse is a costly and time-consuming eviction process.
The verification waterfall advantage
Successful screening companies are solving these challenges by implementing what we call verification waterfalls, which combine a number of automated verification solutions in a coordinated sequence. Rather than relying on any one verification method as a single source of truth, they implement a series of steps or options that dramatically improve fraud detection while maintaining a smooth applicant experience.
The waterfall approach works by progressing through different methods until a successful verification is achieved. If the first verification attempt succeeds, the process is completed. If not, the system seamlessly and automatically moves to the next method in the chain.
It’s not just about catching fraud; it’s about optimizing the verification flow from end to end. Legitimate applicants are verified faster, while fraudsters are flagged and stopped early on, before they can progress through the system. The result is higher completion rates for honest applicants and stronger protections against fraudulent ones.
Architecting an effective waterfall approach
The most effective screening companies structure their multi-step verification flows in order of data availability and source fidelity. Typically, that looks something like this:
- Step 1: Direct-source payroll data
A direct connection to an applicant’s payroll provider or employer account provides the most comprehensive verification solution on the market. This method pulls current information—including real-time employment status and employer name, verified gross income details, and proof-of-income documents like paystubs, W-2s, and benefit verification letters—straight from the system of record. This also offers insights into income from gig work or government benefits that other methods might miss.
- Step 2: Direct-source banking data
For applicants whose payroll provider or employer isn’t covered by a direct payroll connection, connections to their bank accounts can offer visibility into deposit, spending, and transaction patterns—including any NSF charges—and verify their financial assets.
- Step 3: Intelligent document processing
When direct payroll and banking data aren’t available, document analysis—sometimes aided by advanced OCR technology—can extract and verify information from uploaded paystubs, tax forms, bank statements, and other documentation while detecting sophisticated forgeries that would likely fool screeners reviewing manually.
The key advantage of this sequence is that it maximizes automation while minimizing exposure to fraud. Argyle’s direct payroll connections, for example, achieve 55% conversion rates and 95% data completeness on average—much higher success rates than traditional methods—providing robust protection against fraud right at step one.
Modern waterfall approaches often give applicants multiple verification options, allowing them to choose between connecting their payroll, employer, or bank account —with document upload as a fallback option when a direct account connection isn’t available.
The early verification advantage
The most effective screening companies are integrating verification waterfalls early in the screening process, rather than treating verification as a separate downstream step.
This front-loaded approach catches fraud before it can progress, reduces processing times for legitimate applicants, and creates a smoother overall experience that boosts engagement and completion rates.
Beyond fraud prevention: operational benefits
While fraud prevention is the primary driving factor behind multi-step verification waterfalls, screening companies are discovering additional, operational advantages and efficiencies that make these strategies essential to compete in a crowded market. These include:
- Faster processing times: Building in multiple verification methods (like from payroll and banking connections) reduces the chances an application will be passed off for manual review. That means applications that once took days to process can now be completed in minutes, easing the burden on busy teams and getting applicants answers faster.
- Reduced manual workloads: Automated verifications significantly reduce the effort screening staff put into routine tasks—like painstakingly reviewing documents for fraud and calculating rent-to-income ratios from paystubs and other documents—allowing them to focus on customer service and avoiding needless human errors.
- Better data quality and decision-making: Multi-step verification processes provide screening companies with richer, more accurate applicant datasets than traditional methods. Better data quality then enables better risk assessments and more informed decision-making for property owners and managers.
- Competitive differentiation: The ability to offer faster, more accurate verifications with superior fraud protection give screening companies a significant advantage. Property owners and managers increasingly prefer screening partners that can deliver speed without sacrificing security.
Evidence from the market
The impact of these multi-step verification waterfalls is already becoming apparent. For example, application fraud detection companies like Snappt report that their waterfall-based, Argyle-powered verification strategies are increasing completion rates by 30%. And screening companies like SafeRent report that they’re better able to root out fraud while reducing verification times from four days to a matter of hours.
The most telling metric, however, is that screeners using advanced verification solutions report significantly fewer fraud discoveries after move-in day. This contrasts traditional methods, which frequently leave falsified applications undetected until tenants default on their rent payments and enter the eviction process—at which point the financial damage is already done.
Key takeaway
The rental application fraud crisis isn’t going away anytime soon. If anything, it’s likely to intensify as economic pressures persist and fraud techniques grow smarter and more accessible. For tenant screening companies, that means muti-step verification waterfalls aren’t just a nice-to-have; they’re becoming essential infrastructure for sustainable and secure operations.
The companies that recognize this early and invest in comprehensive solutions will be best positioned to serve property owners and managers’ evolving needs while maintaining the operational efficiency they need for profitable growth. The ones that continue relying on single-point methods risk becoming increasingly vulnerable to fraudsters while delivering a slow and disappointing applicant experience.
Ready to see how a verification waterfall strategy can transform your screening operations?
Reach out to Argyle’s team to learn more about our industry-leading verification platform, which combines direct-source payroll, direct-source banking, and doc processing into a comprehensive solution.
