How to avoid falling victim to hiring fraud

How to avoid falling victim to hiring fraud

Keith Rosser, Director of Group Risk and Reed Screening, talks to us about the worrying trend for fraudulent activity in the recruitment space, from fake qualifications to the misuse of AI tools.

Keith Rosser, Director of Group Risk and Reed Screening

Research shows significant increases in the UK’s ‘Fraudscape’ – with 64% of fraudulent filings being identity fraud and a 900% per annum rise in deepfake videos. The growth of sophisticated technology is enabling this shift, and it’s also resulting in a rise in hiring fraud – a danger to many businesses across the globe.

But how safe is your business?

“Employers should be very worried about hiring fraud,” said Rosser. “With the development of technology and improvements in the speed of hiring, we’ve seen hiring fraud accelerate at an unprecedented pace.”

What is hiring fraud?

Reed Screening, together with Better Hiring Institute and other partners, define hiring fraud as any fraud committed during the hiring process, which may be committed by an individual against an organisation or by an entity against a jobseeker.

Hiring fraud manifests itself in various forms, from falsified credentials and fake references to identity theft and AI abuses.  

“The tactics scammers use often deceive recruiters and can lead to the unwitting employment of unqualified or dishonest individuals, and the consequences for businesses can be both financially and reputationally damaging,” said Rosser.

“Technology has enabled criminals to take advantage of traditional recruitment processes, and organisations must adapt if they are to avoid CV fraud, employment scams, manipulation of AI tools and many more tactics.”

Protecting your business against the different types of hiring fraud

There are various types of hiring fraud – many of which are becoming increasingly sophisticated and harder to spot.

Below, Rosser lists some of the top fraudulent activities businesses should be aware of during the hiring process, and explains how they can protect themselves.

1. Reference fraud

“Arguably one of the biggest threats at the moment are ‘reference houses’,” said Rosser. “These are organisations that provide fake references for candidates during the vetting stage of hiring.”

In these situations, the contact details provided by the applicant will point businesses towards a reference house, instead of a previous employer, for them to subsequently give a fake reference. Often, the contact details are very similar to a legitimate company, and some reference houses even go as far as creating their own website and offering services, such as fake bank statements or telephony verification services, for the individual to use to support the reference if challenged.

Over 100 reference houses were identified in 2023 alone. 

“Reference houses are often used to cover a lack of experience, full employment history, or at worse, fraudulent history that may be relevant for more sensitive jobs roles,” said Rosser.  

When on-boarding new workers, Rosser advises businesses to be vigilant and question anomalies. This could include asking the following:

  • Does the email address look official? Are there any spelling errors or additional characters added?
  • Do the dates of the reference match the employment history shown on the CV?
  • Does the referee’s job title suggest a position of responsibility?

It is also important to check references against lists of known reference houses, or to insist your employee screening company builds in reference house checks into the hiring process.

2. Manipulation of AI

“Although the use of AI-generated interviews is an advantage for applicants, it can bring several disadvantages for employers,” said Rosser. For example, AI platform, ChatGPT, can help jobseekers to craft their CV and help with putting together answers to interview questions in a way that will give them a higher chance of securing a role.

“The issue here is that this can lead to people being hired when they actually lack the knowledge they need to succeed in the role,” continues Rosser. “On top of this, with more advanced AI applications, some people can even use deepfakes to pretend to be a person they aren’t during a job interview. This can be exceptionally dangerous for ‘remote only’ job roles, where it’s even more difficult to identify a fake worker.”

Rosser adds that employers can mitigate the use of AI-generated responses by:

  • Utilising AI detection systems
  • Considering competency-based interviews
  • Being clear to jobseekers how AI can or can’t be used during the hiring process.

3. Dual employment

The COVID-19 pandemic has brought about significant changes in the way we work. Jobs that were once conducted face-to-face have either become fully remote or hybrid, leading to the rise of ‘dual employment’.

“Dual employment is the practice of working two jobs simultaneously and usually breaches workplace rules and contracts of both the primary and secondary employer,” said Rosser.

“If someone is working at a competitor business, this could result in financial losses, or the increased risk of trade secrets or confidential data being shared. And it will often lead to a loss of productivity for your business.”

In such cases, he advises the following:

  • Revising employee agreements/contracts to use language that restricts ‘dual employment’
  • Conducting overemployment monitoring checks at point of employment, or ensure your employee screening company is doing so
  • Regular screening checks for current employees in specific roles.

What should businesses be doing?

There are many other ways hiring fraud occurs, including immigration, qualification and CV fraud – to name a few.

“Detecting fraudulent applications has become increasingly challenging. However, employers can use several strategies to safeguard their recruitment processes,” said Rosser.

Reed recently partnered with the Better Hiring Institute, the Prime Minister’s Anti-Fraud Champion, and Cifas to launch a free guide: Tackling hiring fraud: the UK’s response to a growing problem. This guide contains a useful checklist for human resources directors and chief people officers to ensure their organisation has all the right defences in place.

“The main challenge at hand for employers is that hiring fraud and available technology to combat it are continuously evolving,” said Rosser. “Outsourcing is not only the easiest way to remedy this, but it’s usually the most cost-effective solution too.”

With many UK screening companies now owned by global firms, with less of a focus on the UK context, Rosser says it’s becoming more important to choose a UK specialist that’s up to date and spearheading future policy, legislation and systems needed in the UK to respond.

“Technology has enabled criminals to take advantage of traditional recruitment processes. It’s time for businesses to get ahead to protect themselves to ensure they don’t fall victim to hiring fraud,” concludes Rosser.

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