What Is Employment Verification Fraud?

Fraudulent employment verification involves candidates manipulating or fabricating their employment records to deceive employers. This practice is becoming more common due to job market competition and how easy it is to access online tools that promote fraud.

There are a few ways an applicant can deceive a potential employer:

• Fake references: Candidates may provide references from people posing as former managers or colleagues. Some even use fake reference websites that create convincing identities and employment details.
• Forged pay stubs: To validate income or employment history, applicants sometimes submit altered or completely fake pay stubs.
• Fabricated job titles or experience: Candidates may exaggerate roles or responsibilities to align with job requirements.
• Fake diplomas or certifications: Some applicants provide counterfeit diplomas, certifications, or transcripts to claim qualifications they never earned.
• Inconsistent employment dates: Applicants may manipulate the timeline of their employment history, adjusting start and end dates to cover gaps or misrepresent job stability.
• Fake online profiles: With how easy it is to fake social media or resume profiles, candidates can easily fabricate their career histories, skills, or endorsements to make them look more qualified.
• Altered background check results: Some applicants tamper with background check information, such as criminal records or education verification, to hide red flags or avoid disclosing past issues.
• Stolen identities: In extreme cases, fraudsters may steal personal information and use it to create completely fabricated resumes or job histories that belong to someone else.

Several online platforms cater to fraudulent employment verification. These services create fake employment histories, including customized reference letters and even interactive websites for fictitious companies, making fraudulent candidates look more credible during hiring.

A perfect example of why you should perform thorough background checks, including employment verification, is seen in the case of a former Calgary Transit employee, David Hamilton, who stole almost $375,000 over seven years by taking coins from fare collections. He carried coins home daily, averaging $200 daily, demonstrating how small, repetitive thefts can accumulate into significant losses​. Wouldn’t you agree that David’s next employer is risking their business if they fail to perform a comprehensive background check?

Industries Most at Risk

Sectors requiring high levels of trust or skill are particularly vulnerable, such as:

• Healthcare: Misrepresentations can put patient safety at risk.
• Finance: Fraud can lead to significant financial losses and compliance risks.
• Tech: Misrepresented skills can disrupt projects and undermine innovation.
• Legal: Inaccurate qualifications can lead to poor counsel and legal issues.
• Education: Fake credentials undermine teaching quality and student outcomes.
• Construction: Falsified certifications put safety at risk and lead to substandard work.
• Government and Public Services: Fraudulent backgrounds can erode public trust and create security risks.
• Retail and Hospitality: Misleading experience can impact service quality and operational efficiency.

Another example comes from the retail industry. A worker exploited IKEA's refund system to issue almost $400,000 in fraudulent refunds. They covered their tracks by altering inventory records. This story highlights how insider knowledge of processes can be abused, making employment verification checks more critical than ever.

Why Candidates Fake Their Employment History

There are several reasons why people may fabricate their employment records when applying for jobs:

• Competing in the job market: Some candidates inflate their job titles, responsibilities, or experience to appear more qualified.
• Covering gaps in employment: Applicants may fake work histories to hide periods of unemployment and avoid difficult questions.
• Concealing a poor job record: Some adjust their histories to hide terminations or other negative experiences to improve their image.
• Desiring a higher salary: Candidates may exaggerate past salary figures or fabricate higher-paying roles to negotiate for better compensation at their new job.
• Boosting perceived skills: Applicants may list skills or qualifications they don’t have to meet job requirements, thinking they can learn on the job or bluff their way through interviews.
• Impressing employers: Some may feel the need to appear more experienced or accomplished to meet the expectations of employers, particularly in industries that value prestigious backgrounds.

Risks of Fraudulent Employment Records

Employers can face severe problems if fake employment records go unnoticed, such as:

Negligent Hiring and Legal Issues

Hiring someone with a fake work history can risk legal trouble if the employee causes harm or cannot do their job correctly. Employers may be held responsible, leading to possible lawsuits and a damaged reputation. Thorough background checks can help you avoid these risks and comply with the law.

Productivity and Workplace Safety

Employees with fake credentials can upset team harmony and lower productivity. Their lack of skills can cause poor work, mistakes, missed deadlines, reduced productivity, and extra stress for coworkers. In serious cases, hiring unqualified workers can be a safety risk and lead to accidents or other problems.

Financial Losses and Data Risks

Hiring someone with a fake employment record can increase turnover costs, including recruitment, training, and onboarding expenses. Fraudulent hires with access to sensitive information can misuse your data, resulting in potential legal and financial consequences.

Potential Red Flags During the Interview

Being aware of the following red flags can help prevent costly mistakes, saving you time and frustration down the road:

• Inconsistent job history: Watch for unexplained employment gaps or jobs that can’t be verified. Vague titles or exaggerated responsibilities are red flags, as is a pattern of frequent job changes with little time spent in each role. If a candidate’s timeline doesn’t add up, it’s worth digging deeper.
• Questionable contact information: Pay attention to a candidate’s contact details. Personal emails or phone numbers instead of company contacts can raise concerns. Fake references often use untraceable contact info or might be unreachable when you try to verify their claims. Be cautious when you can’t communicate directly with former employers.
• Unclear or evasive answers: During the interview, watch for candidates who get defensive or refrain from sharing information about past jobs. If their resume doesn’t match their answers or they can’t explain inconsistencies in their story, it’s a red flag. If they’re quick to change the subject or can’t account for employment gaps, proceed cautiously.

Strategies for Prevention and Detection of Fraudulent Applicants

The following tips can help protect your company against fraudulent applicants:

Run Background Checks

Run thorough background checks to ensure your candidates’ job histories are legitimate. Verify job titles, employment dates, references, and reasons for leaving to confirm that their information matches what they’ve provided.

Use Technology

Leverage AI tools to automate and streamline the verification process. AI-driven software can quickly identify inconsistencies in resumes, job applications, social media profiles, reference details, and employment records. These tools can cross-reference data from databases and other resources to detect discrepancies. 

Train Your HR Team

Teach your HR team how to spot fraudulent information. By providing fraud detection training, your team will be better prepared to identify red flags and handle potential issues when hiring.

Update Your Hiring Policies

Review and update your hiring policies to include more stringent verification requirements. Standardizing background checks and setting strong guidelines for handling inconsistencies can help protect your company.

Benefits of Comprehensive Employment Verification

Comprehensive employment screening goes beyond just a background check. Here are some key advantages of thorough employment screening:

Stronger Workforce Integrity

Employment verification helps you hire qualified, trustworthy people. By checking work history, you can identify discrepancies, which reduces the risk of hiring candidates with fake records. This process promotes honesty and encourages trust and accountability in your workplace.

Mitigating Risks

A thorough employment verification process helps companies avoid costly mistakes like negligent hiring or compliance violations. By spotting red flags in a candidate's background, you can make better hiring decisions, reducing the chances of workplace issues or damaging your company’s reputation.

Building Trust with Clients

Employment verification shows that your company is committed to thorough due diligence, helping to maintain high standards. This commitment reassures clients you have a skilled, trustworthy team, boosting their confidence in your business.

Safeguard Your Business With Hire Performance

Employment verification fraud can harm businesses, risking workplace efficiency, compliance, reputation, legal liabilities, financial losses, employee morale, safety standards, and trust in hiring methods. Employers prioritizing due diligence strengthen their hiring processes and create safer, more reliable workplaces.

Hire Performance is your go-to partner for eliminating fraudulent applicants. We leverage cutting-edge tech like the eScreener platform to streamline the process. This means faster background checks, quicker hiring, and zero sacrifices in accuracy. 

We understand the challenges your business might face, whether you're in healthcare, finance, logistics, or retail. We help you meet regulatory standards with tailored solutions that ensure the verification process fits your hiring needs. 

Don’t leave your hiring decisions to chance. Choose Hire Performance for thorough and dependable verification solutions. 

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