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Combatting Fraud: Why Employee Background Checks are Important

BManagers at an Indian technology company used an employee background checking firm to investigate why 30 job applicants had listed the same unknown company as an employer, with surprising results…

The background screening service traced the ’employer’ to a one-room mobile phone repair shop, where they discovered an  individual falsifying applicants’ work experiences for money.

The ‘HR manager’ of the fake IT firm had provided hundreds of job applicants with fraudulent career histories; answering verification calls from employers and describing how they had worked for him doing data entry. The phone shop’s side line in defrauding companies looking to hire is not an isolated case. More than one-and-a-half thousand fake Indian companies were cited in a recent investigation as having been set up solely to sell employment letters to candidates.

Corporate fraud, and particularly job application and resume fraud have typically been high in recent years in India, however there are fears the situation is now spiraling out of control due to dwindling economic growth – at its lowest level in a decade – low business confidence and high interest rates in the country.

Job hunters have responded to the tough Indian employment market by increasingly embellishing their qualifications to get ahead, inventing former employers that are found to be fake during the due diligence process.  Figures released by one Indian background checking firm found that between 2012 and 2013, around one in five job applications it had checked contained information that was untrue; and 51 per cent of academic diplomas included in CVs were fake.  More recent figures suggest that while most job application fraud is at the lower end of the spectrum, eight per cent of offers made for leadership positions at firms in 2013 were withdrawn because candidates were found to have provided false information.

Background screening in India – practically unheard of before the millennium – is now calculated to be worth around $32m annually.  Investigation and background checking services are experiencing increased demand, not only in the wake of increased job competition and a faltering economy, but also thanks to outsourcing driven by cross border companies who want to run their back office operations from the country.

This industry can only expect to grow in India, where investigations companies say they routinely turn up 10-15% of bad hires among companies’ workforces via standard background check processing. Businesses operating in the sub-continent understandably want assurances that their employees are reliable, in the midst of such intense competition and high staff turnover.  Western demand for employee background checking is growing too, with job applicants in the US under increasing levels of employer scrutiny… unless they have come in from another country.

International screening – also called an international background check – is a trend that’s expected to increase markedly in 2014 as employers open offices outside of the US and hire people who have spent time abroad to work domestically.

Comprehensive international background checks can involve an investigation agency’s own regional field agents traveling to meet references given by candidates, and check the existence of companies at which applicants claim to have worked in the past.  But, employers often treat international screening differently from domestic screening; overlooking the completion of comprehensive due diligence on foreign workers based on perceived issues of cost and the difficulty in obtaining the information they would otherwise have sourced easily and more cheaply in a domestic check.

Verifying international credentials or performing foreign criminal background checks on foreign workers are particularly overlooked by Western firms for these reasons, experts warn.  Regardless, performing due diligence and duties of care in these cases remain the same as with domestic workers, so employers are urged work with a reliable international background screening company to meet their obligations and save themselves even more costly bad hires.

Source:  Worldbox – A BIIA Member

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