Why the risk of hiring fraudulent employees just got bigger

By Daniel Callaghan
Daniel Callaghan, CEO and Co-Founder of Veremark, explores the new challenges faced by fintechs and financial institutions during the hiring process

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

It’s forcing hiring managers to think internationally and hire remotely. And now the pandemic has seen to it that virtual is the default, interviewing for a job on a screen – or hiring a candidate you’ve never met in person – doesn’t seem such a strange idea. In fact, it seems like downright good sense.

But with new changes in hiring and recruitment comes fresh vulnerabilities that firms may not have foreseen.

Deep fakes and the recruitment market threat

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

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

Most concerningly, 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, corporate IT databases, and proprietary information.

While the knee-jerk reaction might be to halt all remote job interviews with immediate effect, it still doesn’t fix the vulnerability. Research by Deel found global hiring has increased 145% in the first half of 2022, yet hiring internationally is also higher risk, with qualifications from unfamiliar institutions and accreditations from unfamiliar bodies to be checked and verified – not an easy task.

War on talent increases hiring pressures

Meanwhile, firms rushing to fill vacancies might inadvertently overlook inconsistencies on CVs. Plus, remote really is 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 jobs posted.

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

Although fintechs run an average of seven checks per candidate, data suggests they may not be choosing the most relevant ones. The most common employee checks carried out by businesses in the fintech and financial services sector are global sanctions checks, criminal record checks, and adverse financial history checks. Yet those most frequently failed by candidates in the industry are CV gap checks (25%), employment history checks (14%), and civil litigation case checks (13%). 

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

Social media background checks

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

Unfortunately, in-house pre-employment checks routinely done by HR teams are increasingly not fit for purpose. There’s a reliance on phone and email, with academic institutions notoriously slow at returning information (by which time good candidates have been snapped 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 also 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 differ between countries quite considerably (e.g. 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, analysing 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, narcotics, violence, violent images and (political) hate speech, and produce a report in less than 30 minutes, while following and conforming to official guidelines around social media privacy.

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

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


About the author: Daniel Callaghan is CEO and co-founder of Veremark, the HR tech helping the fintech and financial sector reduce the risks of hiring fraud by automating global pre-employment checks.

Daniel Callaghan
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