Why the risk of hiring fraudulent employees only increased

These are strange times. Ominous signs of a recession loom over what is definitely a candidate job market, with more jobs to fill than people to fill them and firms desperate to attract what talent there is.

It forces hiring managers to think internationally and hire externally. And now that the pandemic has made virtual the default, interviewing for a job on a screen — or hiring a candidate you’ve never met in person — doesn’t seem like such an outlandish idea. In fact, it seems like plain common sense.

But with new changes in employment and recruitment come new vulnerabilities that companies may not have anticipated.

Deep fakes and the threat from the recruitment market

In June, the FBI’s Internet Crime Complaint Center issued a warning about an increase in complaints about the use of deep fakes and stolen personal information to apply for a variety of remote and home-based jobs.

Deepfakes are usually video-based, convincingly altered to misrepresent someone doing or saying something that was not actually done or said. The use of deep fakes in direct job interview situations suggests that employment fraud is becoming far more sophisticated than resume doctoring or degree certificates purchased from dark corners of the web.

Most worryingly, the roles identified in the FBI’s reports included IT and computer programming, database and software-related job functions. Some also included access to customer and financial data, company IT databases and proprietary information.

While the knee-jerk reaction might be to stop all remote job interviews with immediate effect, that still doesn’t fix the vulnerability. Research from Deel found that global hiring has increased by 145% in the first half of 2022, but hiring internationally is also higher risk, with qualifications from unknown institutions and accreditations from unknown bodies to be checked and verified – no easy task.

War on talent increases hiring pressure

Meanwhile, firms rushing to fill vacancies may inadvertently overlook inconsistencies on resumes. In addition, remote is truly a boon for attracting top talent: in February, in a first for LinkedIn, remote jobs received 50% of all applications on the platform, despite representing less than 20% of all positions posted.

The answer is to improve and automate your pre-employment screening processes and increase the scope and range of checks performed as standard.

Although fintechs run an average of seven checks per candidate, data suggests they may not be selecting the most relevant ones. The most common checks on employees carried out by businesses in the fintech and financial sector are global sanctions checks, criminal record checks and unwanted financial history checks. However, the most frequently failed by candidates in the industry are resume gap checks (25%), employment history (14%) and civil litigation (13%).

By sector, fintech and financial services saw the most background checks pick up inconsistencies last year (followed by HR, staffing and recruiting and technology and software), according to Veremark data, based on a sample of more than 100,000 background checks in 180 countries.

Background checks for social media

So, apart from ID, right to work and academic qualification checks, what else is missing? Globally, social media checks, which scan a candidate’s online activity to identify offensive or inappropriate behaviour, are a major blind spot. These accounted for only 0.02% of all checks carried out last year. And negative media checks, which highlight any negative press coverage mentioning a candidate, accounted for 0.71%. Still, both are useful for employers who want to ensure that any new hire aligns with their brand’s culture and values ​​and avoids reputational damage.

Unfortunately, pre-employment internal checks routinely carried out by HR teams are increasingly not fit for purpose. There is a reliance on phone and email, with academic institutions notoriously slow to return information (then good candidates have been snapped up by rival firms), and combing through years of social media posts across multiple platforms is more than a full-time job. Moreover, such methods are far from rigorous or even reliable, especially given the ease with which online profiles can be manufactured and identities stolen.

And then there’s the issue of compliance: rules and laws governing data privacy, as well as “the way things are done” can vary quite significantly between countries (eg criminal checks are not allowed in Singapore, while credit checks are not socially acceptable in Japan).

How technology can help

Fortunately, technology can now do this for you, analyzing years’ worth of posts and images across 14 distinct risk classifications, using advanced machine learning and natural language processing to flag social media posts for specific risk factors including bullying, self-harm, drugs, violence, violent images and (political) hate speech, and produce a report in less than 30 minutes, while following and complying with official social media privacy guidelines.

The good news is that most employees are not bad apples, and even those who return employment history discrepancies – 18% in the UK – may have a very good explanation. But given the potential damage just one unscrupulous hire can do, pre-employment screening is a good investment.

So, whether you’re hiring only from the UK or internationally, make sure your employees are who they say they are.

About the author: Daniel Callaghan is the CEO and co-founder of Veremark, the HR technology that helps the fintech and finance sector reduce the risk of employment fraud by automating global pre-employment checks.