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Ensuring fraud-free hiring with technology-powered employee background check

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4 minute read 25 May 2023

Organizations are securing their talent management protocols to mitigate rising employment fraud.

In brief 

  • Employment frauds such as resume fraud, identity theft, interviews using deep-fakes, and moonlighting are on the rise.
  • Obsolete verification methods are proving to be insufficient to combat fraudulent activity that leverages cutting-edge technology.
  • There is a dire need to tech-proof employee onboarding and talent management functions.

In today’s constantly evolving hiring landscape, which is purported to proliferate further as the economy shifts to recovery mode, fraud risks are multiplying too. Employers who place their bets on seemingly promising candidates without conducting a thorough background check are vulnerable to fraud. Impersonification, hiding information, falsifying facts, placing proxy attendees during work evaluation, multiple affiliations, and phishing attacks on job portals have been rampant in recent times. 

According to the Association of Certified Fraud Examiners (ACFE) Report to the Nations 2022, 43% of organizations that fell prey to employment fraud did not run a background verification prior to hiring. Of the companies that conducted background screening, factors like employment history (45%) and criminal checks (40%) took precedence over reference checks (30%), education verification (30%), and credit checks (21%).

In this scenario, it is not uncommon to discover that the job applicant who had taken the test and answered the interview is not the same person who reports to work every day. Often prospective employees don’t disclose incriminating information about themselves or fake credentials and qualifications to land a job. This is becoming increasingly rampant in the gig economy, where freelancing is the buzzword and employment history remains quite difficult to track. When asked what was the most significant employment risk that their organization encountered, according to an EY LinkedIn poll, 27% of respondents said interviews using deep fakes were a concern, while 22% of respondents have encountered resume fraud.

Besides being a human resources nightmare, these frauds also pose a risk to the confidentiality of data in the event an employee starts moonlighting for competing firms. It can lead to siphoning of valuable information that can give the competitor an edge and even render the system vulnerable to cyberattacks. LinkedIn poll respondents are most worried about moonlighting, with a whopping 41% revealing they have encountered it in their company. Meanwhile, 10% of the polled users have issues pertaining to candidates' hidden criminal records. This worrisome fraud risk scenario can force even the grittiest and most enthusiastic employers to retreat to old ways of hiring without taking adequate background screening measures, even if that means not tapping into the reserve of potential that can create a vibrant workspace. 

How EY can help

  • Forensic & Integrity Service Offerings

    EY offers a comprehensive suite of forensic integrity services to help organizations investigate and resolve complex financial crime and misconduct. Our team of over 4,000 forensic and technology professionals can assist you with transaction forensics, investigations, and more. Learn more about our forensic services today.

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Obsolete screening methods
 

Currently, the hiring industry relies almost entirely on multiple third-party verification vendors who physically visit addresses to check the claims made by prospective employees. As many as 59% of the LinkedIn poll respondents revealed that their organizations employ third-party intermediaries for pre-employment background checks, while 18% conduct manual checks and 9% onboard employees without any employment verification at all.  The manual process is not only time-consuming but also error-prone and allows room for misinterpretations. As many as 14% of the LinkedIn poll respondents confided that their current manual verification process is riddled with errors, while 66% felt that their current method is time consuming.  The costs involved and the exposure of employees’ Personal Identifiable Information (PII) data and the challenges it entails, too, weigh heavy on employers. Additionally, physical verification methods alone are almost redundant now that fraudsters are devising technically advanced scams. Taking the non-virtual part out of the equation makes the process transparent, reduces the chances of employees submitting doctored documents, and ticks all the boxes of data privacy compliance. 

Tech interference
 

While the fraud menace threatens to arrest the application of technological advancement in the hiring space, the answer to the dilemma lies in tech itself. The development of employee background check tools has led to a complete overhaul of pre-hiring formalities. These tools perform API-based ID checks of educational, domicile, criminal, credit, and past employment records against several official databases. Along with this, they also conduct a digital address verification, and harness face-match and geotagging technologies to identify inconsistencies in photographs and verify the sanctity of the claims made. Scaled and customized to fit the hiring prerequisites of diverse industries, these models also have a shorter turnaround time as compared to traditional methods, making for a swifter hiring experience. 

Revolutionizing hiring

At a time when HR departments are reassessing their hiring modules and work strategies and adopting a digital-forward hiring system, it will be ideal to employ a precise and regulatory-compliant model to expedite and secure pre-employment checks. The sky is the limit when it comes to the successful implementation of virtual employee background check and it can soon pave the way for machine learning-based results and even the creation of the first-ever employer trust network using blockchain technology.

Summary

To mitigate rising incidences of employment fraud and manage resource risks arising from the genesis of the hybrid work culture, organizations can deploy technology that uses data effectively. By enabling short turnaround times and minimum human biases or errors, technological solutions and tools can create value through customization, addressing parameters that have a positive impact on employee onboarding and retention. With basic needs in check, there is no stopping the far-reaching impact that technology-based interference can have on building an ethical workplace.

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Forensics
Workforce

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