January 17th, 2023 | Sterling

Identity Verification Uncovers Candidate Fraud in the Hiring Process

Financial Services Industry HR Teams Can Help Mitigate Risk

Last year, the financial and business services team at Sterling witnessed an unusual increase in fraud attempts during the hiring process. There may have been a time when financial services companies felt they were less vulnerable to bad actors, but we have seen firsthand that is not the case.

Modern criminals employ many strategies to trick hiring teams into falling victim to fraud. As a leader in identity and background screening services, Sterling Identity has identified three common scenarios to be aware of:

Trading places

In coordinated identity fraud efforts, an individual or team works together to fraudulently place a criminal accomplice in a given job role. These jobs can be sold on a secondary, i.e. ‘black’ market, to people who the hiring team has never interviewed or vetted, for example through an identity verification.

In these cases, a qualified individual interviews for the open position and undergoes the background check processes as a typical hire would. But on the first day, this person is not the one who actually shows up to work. Instead, this unknown, possibly dangerous stranger arrives for “their” first day. Worryingly, even if the company is doing proper background checks with a Social Security Number (SSN) trace, they can still fall victim to this kind of coordinated candidate-switching scheme.

Fraud threats such as this are why using an SSN trace is not a best practice for HR teams seeking to mitigate corporate risk and help ensure employee safety. By itself, an SSN trace is unable to verify that the provided SSN matches the name attached to an application. Identity verification also needs to be performed to authenticate that the name matches the social security number for a candidate. Only then can a business proceed confidently with its hiring process and take the next step with new hires.

Seasonal hires and re-checks

Summer hires are an important part of the hiring cycle at financial and business services companies. This part of the season presents a unique logistical challenge as companies interview and onboard a large cohort of new hires all at once. However, without a secure background check system already in place, high-volume hiring also presents criminals with an opportunity to take advantage of the stressed hiring structure and infiltrate a company.

One way in which potential hires omit information that may harm their chances is by using a family member’s social security number (SSN) instead of their own. This could be to hide an offense like a DUI, or a juvenile mistake that was not done maliciously. Either way, the hiring manager needs to be aware if the SSN they receive belongs to the person presenting it.

This summer, a case garnered attention which involved a father and son sharing the same name, and the son had used his father’s SSN during the hiring process. The son was hired, worked for the company, and was even extended a full-time offer at the end of the summer. It wasn’t until the company ran a recheck (and he provided his own SSN) that their HR team realized he had not used his own SSN when originally hired.

Had they used Sterling’s Identity verification solution, the incorrect SSN could have been flagged as it did not belong to him. While in some cases, an incorrect SSN may just be an honest typing mistake, this incident highlights an exploitation in the workplace hiring process.

Working with hyphens

People can alter the way they present their names to trick a hiring team into a false sense of security. For example, an individual with a hyphenated name can be intentionally deceptive during the hiring process if proper identity verification checks are not conducted correctly.

Some prospects know that a particular offense occurred and will appear on a background check under their hyphenated last name. If a company is doing a rudimentary background check, the information about this offense will not populate when they check under just the first and last name provided.

This can also be done unintentionally when a person is not deliberately trying to maneuver around an offense, but accidentally. Regardless of the intent, the hiring team should be aware of the record under the appropriate individual’s name.

Identity verification provides hiring companies the opportunity to help protect themselves from fraudulent candidates and inaccurate data. It’s important to know that the person you are screening is truly who they say they are, and identity verification is the only way to confirm that upfront in the hiring process.

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.