How to Spot a Fake Utility Bill

Utility bills: Everyone pays them — or at least those who own or rent a home or business. And it's the type of proof needed to ensure an applicant is a resident of the city they claim to be in. 

But what happens when someone creates a phony utility bill to scam you out of thousands or millions of dollars? Before you can figure out it’s fake, you approve the funds and wire the money to the provided bank account.

Identity thieves know lenders receive volumes of credit applications and approve folks for loans or insurance daily. So they forge your customers' details and signatures on false documents to "prove" their identity and address before defrauding you and their victims.

Lenders who still rely on manual checks and reviews before approving loans often fall victim to such scams. Some fake documents might fall through the cracks, leading to great financial and reputational losses, which is why you should always be alert to spot false utility bills.

This guide shares everything you need to know about fake utility bills, how to identify one, and prevent fraud.

Why might someone create fake utility bills?

One of the common reasons people need fake utility bills is to prove residency at a particular address, especially when opening credit cards, debit cards, or bank accounts. 

Identity thieves create and use fake water, gas, or energy bills to steal personal information, open utility accounts, and run up charges in their victims’ names.

Imposters send out “smishing” text messages or phishing email scams to convince their targets to pay or supply personal or financial information to “sort out a service issue.” 

Utility bill scams surged at the height of the COVID-19 pandemic, particularly after the U.S. Congress authorized $669 billion in forgivable pandemic loans.

Data from the Federal Trade Commission shows that consumers lose billions of dollars to fraud every year. For instance, in 2021, the figure was more than $5.8 billion, of which more than $2.3 billion was lost to imposter scams. 

The Secret Service estimates that more than $100 billion was stolen from a range of programs, including the CARES Act, through fraudsters who claimed to run small businesses in need of funds. 

The Paycheck Protection Program under the Small Business Administration (SBA) was another target of fraud. 

Banks had to distribute funds quickly to prevent a pandemic-induced economic crisis. Under SBA rules, lenders wouldn’t be liable if borrowers didn't meet the program’s criteria, meaning normal due diligence wasn’t as urgent as acting expeditiously.

Bad actors leveraged the leniency of banks and lenders at the time to secure doctored paperwork and perpetrate fraud.

They created and used bogus billing documents or statements from legitimate American utility providers, like Florida Power & Light or Pacific Gas & Electric Co. to lure unsuspecting utility customers before stealing their information and using it for fraudulent activities.

Like fake W-2 forms or 1099s, a phony utility bill is just a click away. 

Websites that provide fake utility bill templates are readily available for a small fee, making it easier for identity thieves and scammers to obtain bogus documents and steal from their unsuspecting victims. 

Jesse Carlson, Executive Vice President & General Counsel at Kapitus, says such sites allow people to create documents that evade human reviewers or automated fraud detection tools.

Why do banks and lenders ask for utility bills? 

If you’re in the market for a loan, banks and other lending institutions will require some important documentation from you: bank statements, personal identification documents, credit statements, loan paperwork, and income tax returns. 

These documents verify your identity and confirm to the bank or lender that you can afford the deposit, closing costs, and your monthly installments or payments. 

Plus, they verify how much you’ve saved and the source of that money to see that it’s your cash—or at least, from a legitimate source—not discreet gifts or loans that make your financial status look better than it is.

Sometimes banks want additional documents like utility bills to ensure you have no delinquent accounts. 

If you’re way behind on utility bills, an electric, gas, or water provider may send your account to a collection agency that sends your details to one or more credit bureaus. This negatively impacts your credit score, reducing your chances of getting your loan approved.

A lender wants to see your full financial profile before approving (or denying) a loan and when setting interest rates. 

Paying your utility bills on time signals to lenders that you’re a responsible borrower and can improve your chances of getting a loan with favorable terms.

If you have little to no credit history, lenders will often ask for other documents to review other forms of credit you may have. Utility bills tell lenders whether you’re more of a threat (e.g., letting other important bills slide or allowing loans to become delinquent) or worth extending credit to. 

In 2017, Ford Motors considered looking at applicants’ phone numbers on previous applications to see if they'd provide the same details. The company wanted new ways of approving consumer credit applications through Ford Credit, so they grouped applicants who listed different numbers as potential phone payment defaulters. 

A County Court judgment or missed mortgage repayment can significantly impact your credit score. But sometimes, it’s the more minor things like a missed utility bill payment that make or break your loan application.

How fake utility bills can negatively impact a bank or lender

False documents intentionally mislead banks or lenders into releasing funds or making loans they wouldn’t have if presented with facts.

Fraud—on the bank or lender’s part—might involve creating new, forged documents to proceed with loan approvals or abetting a crime by turning a blind eye to fraudulent activities perpetrated through using fake utility bills and other documents. 

Some penalties for such fraud include:

• Fines: Lenders could incur hefty fines depending on the seriousness of the crime.
• Restitution: The lender might be required to compensate the victims of fraud for their loss.
• Prison sentence: Courts can sentence the perpetrators of the fraud to prison terms whose duration is determined by the offense.
• Business closure: In extreme cases, the bank or lender may shut down if found culpable, especially in multiple fraud cases.

How to spot a fake utility bill

A Snappt survey found that one in four fraudulent applications go undetected. Before the pandemic, the percentage of fraudulently altered applications stood at 15% but increased to 29% in September 2020. 

The problem of fake documentation hasn’t gone away, especially since it’s difficult to detect fraud for applications submitted via online platforms. AI-powere fraud detection software like Inscribe improves the reliability of the lending process and helps financial institutions detect fraud in false documents.

Knowing what to look for can help banks and lenders spot fake utility bills and prevent fraud while protecting themselves from the consequences of fraud and noncompliance.

Some key things to look for in a fake utility bill include: 

• Misspellings 
• Incorrect names and dates
• Inconsistencies in decimals and other elements
• Numbers don’t check out against previous bills
• Multiple rounded numbers
• Font type and size inconsistencies
• Company logo resolution differs from the actual logo

Prevent fraud when verifying the validity of a utility bill

Fake utility bills can resemble the real deal, making it challenging for banks or lenders to catch, especially when delivered via email or other online channels.

Inscribe’s AI-powered fraud detection technology helps financial institutions prevent fraud and save money by detecting false information, identities, inaccurate customer or company information, and inflated figures.

Contact a member of our team to learn how our tool can help you spot false documents, fight fraud, and protect your business.