Organizations share confidential information and valuable data with employees based on the trust established during the onboarding process. The trust is built on the candidate’s past employment, educational, criminal, credit, and behavioral claims. If the relationship is built on false pretext or with forged documents submitted by the candidate to improve their chances of being recruited, it can prove detrimental to the organization. All frauds are breaches of trust. Occupational fraud—asset misappropriation, corruption, and financial statement fraud—is the costliest such and, yet, also the most common form of deception that takes place within organizations. The Report to the Nations 2022, which covered 2,110 cases of occupational fraud in 133 countries, reported losses of more than US$3.6 billion incurred by affected companies. Candidates who use fraudulent ways to get hired and submit inauthentic documents during pre-employment background checks are likely to operate with the same mindset during their employment, resulting in increased incidences of occupational fraud. 

Failing to onboard employees with verified credentials also necessitates the implementation of enhanced security measures, internal controls, and employee verification and monitoring systems that can increase operational costs. Apart from the monetary toll, organizations also pay heavily to hire resources to investigate claims of fraud, gather evidence against fraudulent employees, and then in legal costs to resolve the issue and pursue action against the miscreants. In addition, they also must expend time and resources to replace talent.  

A fraudulent candidate presents false information due to the lack of appropriate credentials to secure the position organically. With the advent of technology and remote jobs and hiring scenario, fraudsters are creating deep fakes to impersonate qualified professionals and land a job on their behalf. Such frauds, triggered by impersonation, can hamper overall team productivity, compromise business outcomes, and expose the organization to legal and reputational damage.

While employees committing employment fraud stand to lose their jobs when their misdemeanor comes to light, the organization incurs long-term reputational damage in the ordeal. The resulting negative publicity can have serious repercussions. Customers and investors have a hard time trusting companies that make headlines due to the wrong reasons. It also impacts the other business relationships that the company might have carefully cultivated over a period. It is both costly and time-exhaustive to regain reputation, once tarnished.

Employment fraud, like every other scam, is difficult to avoid. However, occurrences can be reduced considerably by implementing innovative solutions offered by employee background verification companies. To nip the issue of wrongful hires in the bud, organizations can benefit from investing in tech-forward tools for background verification that leverage data and cutting-edge innovation like face-matching and geo-tagging to address the loopholes in the employee records verification process in a timely and cost-effective manner. This early intervention in the form of employee background check and continued monitoring throughout the employee’s term at the organization can help reduce the additional costs incurred in operational oversight and help keep other instances of fraud in check too.