Legal

How to tackle recruitment fraud

5 Jun 2019 By Jim Gee

Jim Gee explains how employers can best defend their business from threats across all parts of the hiring process

Stories of fake pilots bluffing their way into the cockpit – such as Leonardo DiCaprio’s portrayal of Frank Abagnale Jr in the 2002 film Catch Me If You Can – may seem like fanciful tales. Unfortunately, for many businesses, this threat is not a farfetched fiction.

Recruitment fraud is a significant problem across the world and naturally, the cases that reach the public realm are the most shocking. However, what is arguably more worrying are the hundreds of thousands of unreported cases, where fraudsters successfully infiltrate their host organisation and continue to stay under the radar, causing untold damage. 

Initial misrepresentation or misleading information presented by a prospective employee on a CV is often seen as being little more than a ‘white lie’, but it can and sometimes does lead to bigger financial and reputational costs down the line.

For the first time, Crowe research has established a baseline cost for such fraudulent activity – UK businesses are losing £23.9bn a year – and reveals the extent that businesses are continuing to leave the door open to fraudsters. 

The good news is that there are steps that can be taken to mitigate, counter and limit the damage of such attacks.

Acknowledge the threat

Recruitment fraud occurs at all levels, with fraudsters targeting organisations of all shapes and sizes, across all sectors. 

The first step to mitigating any threat is to identify and acknowledge it. Simple pre-employment checks as part of the recruitment process provide businesses with a first line of defence in verifying that candidates are qualified for the role and are who they claim to be. 

Recognise the scale of the problem

Once ‘inside’, the cascading costs of a bad hire really kick in. Negligence, incompetence and poor performance on the part of an unqualified employee will make the organisation vulnerable from an efficiency and reputation standpoint. Dedicated fraudsters, meanwhile, are emboldened at duping their way in and commit to their deception, making further misconduct commonplace including fraud, theft or corruption.

Periodical vetting of existing employees across all levels not only shows that as a business you are treating candidates and new joiners fairly but will help identify suspicious behaviour by fraudsters who may have successfully infiltrated the company and act as a deterrent to further criminal behaviour. 

Deploy the appropriate checks 

Naturally, there are some sectors at greater risk than others. For companies hiring for roles in healthcare, aviation, financial services and local government, for instance, vigilance is even more vital. 

For example, after the financial crisis many banking and finance roles are now regulated by the Financial Conduct Authority (FCA) and individuals are required to undergo a series of exhaustive checks including employment and education verification, criminal record checks, credit checks, formal identity checks and validation of professional and character references.

Social media audits, directorship searches and drug tests may also be relevant in other roles and sectors.

Don’t go it alone 

There are a variety of international legal agreements in place designed to tackle recruitment fraud, in addition to sector-specific regulations. However, there is also debate in some countries about the circumstances in which the provision of false information supplied during the recruitment process crosses over to fraud. 

In some instances, deceptions can be treated as a criminal act. However, there may also be the additional dimension of offences which can be committed without prosecution. In those cases, the consequences incurred include potential liabilities and penalties for employers. 

Specialist advisors can advise on a country-by-country basis and will be able to recommend the appropriate pre-employment checks, relevant to the region.

Adopting the strategies outlined will strengthen your defences. Fraud, particularly in the cyber age, will always be a threat, but in the case of recruitment fraud, many organisations are unwittingly welcoming fraudsters in with open arms. 

Jim Gee is national head of forensic services at Crowe

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