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Recruitment fraud now costs businesses £23 billion annually

By Danny Mitchell on People Management Magazine

Businesses that do not take pre-employment processes seriously are leaving the door open to financial loss and reputational damage and have contributed to a mushrooming of recruitment fraud in the UK, according to a new report.

The Real Cost of Recruitment Fraud report, published by Crowe UK in conjunction with the University of Portsmouth, established the annual cost of recruitment fraud to UK businesses as £23.9 billion.

Crowe carried out CV checks of an unnamed organisation’s 5,000 employees and found more than three-quarters contained discrepancies, with one-fifth using inflated job titles and 12 per cent falsifying grades. A further study showed that almost a third of 619,000 pre-employment checks undertaken over a year-long period uncovered discrepancies.

Jim Gee, national head of forensic services at Crowe, warned against businesses “welcoming in a Trojan Horse with open arms” by neglecting to take simple steps to protect themselves.

“Recruitment fraud is a serious problem for organisations of all shapes and sizes. Initial representation or misleading information presented on a CV is often seen as little more than a ‘white lie’ but it can and does lead to bigger financial and reputational costs down the line,” he said.

Almost all the businesses surveyed checked applicant references and two-thirds took steps to confirm information supplied on an application, but almost none performed credit checks before hiring.

Recruitment fraud has been highlighted as a growing issue in recent years, though individuals are just as likely as employers to become victims, with some even turning up to start work in fake jobs having handed over bank details or cash to scammers.

Keith Rosser, chair of the Metropolitan Police’s SAFERjobs initiative, said there were often “nefarious” reasons why people decided to defraud businesses. The main reason for pre-employment checks is to confirm a person’s identity and to find anything adverse applicants may keep purposely hidden, he added.

“It’s often personal reasons that cause people to defraud companies. Some people have histories of debt or challenges in their personal life that trigger these actions. It’s a key reason for businesses to undertake credit checks. However, we beat the drum and say that people should not be precluded from the [recruitment] process just for these reasons.”

The most common recruitment fraud experienced by organisations was false qualifications, followed by fabricated references, use of false or fabricated documents and exaggerated grades.

The report advocated more stringent vetting strategies that included continued checks during employment for roles with a higher risk of misconduct. More than half of businesses said they did not generally vet staff while they were employed and those that did mainly checked references, criminal records or sought confirmation of information supplied on the application form.

“It’s important to confirm that employees have achieved what they say they have. Many people are employed in roles dangerously out of their depth and the only way to survive is to break the rules and manipulate numbers,” Rosser said.

Indian business Axact, which portrayed itself as the “world’s largest IT company”, was prosecuted and shut down in 2018 for issuing more than 3,000 fake qualifications to UK-based buyers, many of which fooled employers into hiring unqualified workers.

One case featured in the Crowe report concerned a local authority which employed a fraudster as a contracts officer without undertaking any checks to verify her employment history or references.

She paid herself more than £90,000 and sent the money abroad before being caught. A police investigation reviewed her original application and found a false referee included a telephone number linked to her husband. While the courts sentenced the perpetrator to three years in prison, only some of the money was retrieved and the publicity embarrassed the local authority.