IN BRIEF:
• Advanced background checks are being integrated into hiring protocols to address the rise of employment fraud in the digital age, with a focus on enhancing fraud detection rather than guaranteeing complete prevention.
• Future technological developments, such as machine learning and blockchain, hold promise for further improving the integrity of hiring, but caution is advised to avoid overreliance on tech solutions.
As the global economy shifts towards recovery, organizations are ramping up their defenses against the threat of employment fraud. The hiring landscape, ever-evolving and increasingly digital, presents various opportunities for deceitful practices. Impersonation, falsification of qualifications, and sophisticated phishing attacks are just a few of the tactics employed by fraudsters to infiltrate companies.
Employers who place their bets on seemingly promising candidates without conducting thorough background checks are especially vulnerable to fraud. Impersonation, hiding information, falsifying facts, sending proxy attendees during work evaluations, multiple affiliations, and phishing attacks on job portals have been increasing given the advent of technology.
The Report to the Nations 2022 by the Association of Certified Fraud Examiners (ACFE) reports that nearly half of the organizations that fell victim to employment fraud (43%) had bypassed comprehensive background checks in their hiring processes. The data highlight the need for a more diligent and nuanced approach to candidate verification, one that balances thoroughness with the realities of the modern job market.
THE SHORTCOMINGS OF TRADITIONAL BACKGROUND SCREENING METHODS
Currently, the hiring industry relies almost entirely on multiple third-party verification vendors who physically visit addresses to check the claims made by prospective employees. In one of the surveys conducted by EY, as many as 59% of the LinkedIn poll respondents revealed that their organizations employ third-party intermediaries for pre-employment background checks, while 18% conduct manual checks, and 9% onboard employees without any employment verification at all. However, the manual process is not only time consuming but also prone to human error as well as allowing room for misinterpretation.
As many as 14% of the LinkedIn poll respondents confided that their current manual verification process is prone to error while 66% consider their current method to be time consuming. The costs involved and the exposure of employees’ Personal Identifiable Information (PII) data and the challenges it entails additionally weigh heavily on employers.
Physical verification methods alone are almost redundant given that fraudsters are devising more technically advanced scams. On the other hand, making the process non-virtual makes the process transparent, reduces the chances of employees submitting doctored documents, and ticks all the boxes of data privacy compliance.
NAVIGATING THE EVOLVING TECHNOLOGICAL LANDSCAPE
The rise of the gig economy and the shift to remote work have compounded the difficulty of tracking a candidate’s employment history. Traditional verification methods, which often involve third-party vendors personally verifying claims, are becoming increasingly outdated. These methods are not only slow and prone to human error but also raise privacy concerns as they involve the handling of sensitive personal information.
While the fraud menace threatens to arrest the application of technological advances in the hiring space, the answer to the dilemma lies in tech itself. The development of employee background check tools has led to a complete overhaul of pre-hiring formalities. Technology-supported checks have helped simplify the methods for companies to identify anomalies in the overall assessment of the candidate’s past employment experience. Scaled and customized to fit the hiring prerequisites of diverse industries, these models also have a shorter turnaround time as compared to traditional methods, making for a swifter hiring experience.
Digital address verification, face-match technology, and geotagging are other methods being employed to identify inconsistencies in photographs and validate the authenticity of the claims made by candidates. These solutions are more efficient and offer a higher degree of accuracy and compliance with data privacy standards.
THE ETHICAL USE OF TECHNOLOGY IN HIRING
As we integrate these advanced tools into our hiring processes, it is imperative to consider the ethical implications. It is crucial to ensure that these technologies are used responsibly and that they serve to enhance, rather than replace, human judgment. Technology strengthens our hiring defenses, yet it cannot guarantee absolute protection against fraud.
While these technological advancements significantly enhance our ability to detect inconsistencies and fraudulent claims, they are not foolproof. It is important to acknowledge that no system can guarantee a completely fraud-free hiring process. The goal is to reduce the risk of fraud and to build a more trustworthy workforce.
REVOLUTIONIZING HIRING
Looking ahead, the potential for further technological advancements in hiring is vast. Machine learning algorithms are becoming increasingly adept at analyzing vast amounts of data to identify patterns that may indicate fraudulent behavior. Blockchain technology holds the promise of creating secure, immutable records of candidates’ employment histories, education, and credentials.
HR departments play a critical role in navigating this new landscape. They must be adept at using these technological tools while also maintaining a human touch. It is their responsibility to ensure that the hiring process remains fair, equitable, and free from discrimination.
In an era where hiring practices are being redefined by digital innovation, it may be crucial to consider engaging the services of an experienced and technologically enabled third party who can do precise and regulatory-compliant models to expedite and secure pre-employment checks. This way, companies will be able to harness the power of data and technology to hire candidates with verified profiles, enabling a more secure and reliable recruitment process.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Roderick M. Vega is the forensic and integrity services leader of SGV & Co.
