7 Ways Candidates Commit Fraud (And the 5-Layer Defense to Stop Them)

Speaker A: 12 months ago this was a fringe topic. And today in most boardrooms I walk into this is at the heart of the conversation. And I'm going to start by telling you a story. A story about a hire, someone that got placed, Fortune 500 company, an engineer, aced the application process, beautiful CV, wonderful interview, fully remote role. Three months into the role, management started picking up that something is very, very wrong. Something is very off. And long story short, the person that applied for the role was not the person in the role. Fraud, fraud, fraud. After pushing for an in person interview because remember this is a fully remote role, they realized this is not the person that applied. And funneling a uh, salary back to North Korea. Crazy. Now this is not a once off. This is actually a trend in the research and in today's episode I'm going to be referring a lot to research. You can find the articles in the show notes. 41% of organizations now admit that they have appointed a fraud. That is 4 out of 10 hires that organizations are admitting candidates are frauds. This is Solving the people Puzzle where we discuss all things talent acquisition and human resource management. In this episode today on solving the people puzzle, I'm going to speak through seven ways candidates are committing fraud. Seven. And I can promise you some of them you've not even heard of. We're going to walk through all seven. But that's not where I'm going to leave you. I'm also going to share with you five ways to counter these seven fraudulent activities to ensure that you're actually hiring the right person, the real person applying in your hiring process. Let's dive in now you might be going Fran, fraud and cheating isn't new. Why now? Why this surge in the statistics? Why 41% of organizations? And I'm going to give you three reasons today why I believe this is amplified at the moment. Number one, never ever before has cheating and access to technology been so cheap. If you think of many years ago, you needed serious development capacity. You needed serious engineering and technology to be able to pull this off. But, but for $10 a month now you can get a subscription to some sort of AI platform that can deeply affect and enhance the way in which you commit fraud as a candidate. Secondly, this concept of fully remote is now normalized. We're five and a half years post Covid the way of work. The working models of hybrid in office remote has now settled and most organizations, particularly in highly technical skills that are scarce, that are hard to find, where all your talent sits. Fully remote is now normalized and so all of a sudden I don't get to meet the person in person. Think of talent working for you from abroad. I'm going to make this extremely personal. Wamly has got two front end developers who sit in Poland. I have never met them. I have seen them in wamly, I've seen them on Microsoft Teams and I've seen them in Slack and, and that's it. And they've been working for us for more than a year. I've got no idea what they look like except for a picture. And then thirdly, the reason for fraud picking up is the fragmentation of the hiring process. You've heard me say this many, many times before. But if organizations do their hiring either as a combination between manual efforts and multiple pieces of technology, you're creating cracks in the process. Cracks that I will be discussing more in depth in this episode today. But the more fragmented your process is, the more gaps they are, the more opportunity there is for fraud in your process. All right, let's deep dive into the seven fraud vectors. Number one, deep fake candidates. You will not believe the power in real time face and voice swapping that is happening in the application process. The technology is not perfect, but my word, has the progression sped up over the last couple of years. The ability for candidates to fake their voice and to fake their space via technology. Now, one detection firm found fraudulent activity in up to 30% of suspicious sessions. And to be 100% accurate, I am not going to try and memorize all the stats that I have for you here today. Number two, proxy interviewers. Now this one made me smile a little bit because I cannot imagine that you would do this. But obviously according to the research, candidates are doing this. So you believe you're not skilled enough, you're not confident enough, you're not capable enough to go through the application process. So you find a friend, a relative, a cousin, you could even pay somebody to do the application process on your behalf. Now the proxy then aces it. The real person shows up either in person or in my example I shared in the introduction. They get requested to come in and then they get caught out. But how many organizations actually then do this follow through and for how long is the wrong person working in your organization? Number three is AI co pilots. In the application process. Your candidate is in front of their screen, in front of their webcam. But just outside of the frame there's a second screen with AI open and this AI is ready to assist this candidate through the application journey. Now don't be afraid. I'm going to tell you in the five layered approach at the end how you can counter this. But at this very moment this is a reality. In fact, back to my statistics. 91% of U.S. hiring managers say they've encountered or suspected AI generated answers during interviews. 91%. Number four, synthetic identities. One case used 80 stolen identities and pulled in over $5 million. So this is where organized rings create fake identities, rent real documents of individuals from a specific country, set up laptop farms in the area and then fake workers into Western companies. 80 stolen identities pulling in over 5 million. The FBI raided 29 laptops laptop farms in 16 states in this specific example. So this is not just not a candidate, this is an infiltration operation. In terms of synthetic identities, there is no real human. Number five, AI fabricated CVs and portfolios. So every CV now with the assistance of AI can be exactly written to the job spec, the job description, the requirements of the role, making it nearly impossible to fairly differentiate between what is a good CV or not. Now, I've personally been extremely vocal over the last couple of years that I believe the CV is dead. There is no predictive validity left in a cv, especially with the power of artificial intelligence right at this very moment. But the unfortunate truth is that most organizations when they hire, start by asking for the CV. Now if all CVs are AI generated, written specifically for that role, what are you left with in terms of leverage? How do you move candidates forward and how do you reject certain candidates? You can't. Not only is the information potentially fraudulent in the cv, I. E. You can't trust my five years experience, my master's degree, the fact that I have the skills that I'm alluding to, no, all of it's written by AI to match the requirements exactly. Which makes AI matching from a technology perspective really hard. Because if I'm only looking at the cv, matching it to the requirements of the role, and I do not have any other data points, everybody's going to get 100% and progress to the next stage in the hiring process. Number six is assessment cheating. Now for those of you who don't know, I started my career working for a psychometric assessment house. This topic is very different to psychometric assessments that are valid and reliable. Many, many organizations that I know, that I deal with, that I've pitched to, that I've worked with, create their own in house assessments and then these assessments get sent as a take home exercise. The research is saying be extremely careful on the validity of the results coming back to you. If that assessment is not timed if it does not have cheating proctoring capability to catch the candidate or at least signal to you that there is suspicious activity. This is not adding to your recruitment process. It is one of the fraud vectors at the moment. So assessment cheating, the percentage used using it during unprocedented assessments is so much higher at the moment. So be very, very careful of assessment cheating. And then lastly, this concept of a reference call. I'm happy to report that in today's episode and the research that I did that deep fake voice calls with so called former line managers are either now a robot answering the call, a trained relative, friend or cousin answering the call, and there is no reliability in the information that you're getting back. Especially if your reference call is an unstructured call done by a third party just ticking a box. So be very, very careful. This one is new. It is terrifying. Deep fake voice calls with so called former line managers actually yielding zero results to help you make a hiring decision. So in closing, the seven vectors, they are all active, they are all growing. And here is the terrifying news. They are not going to go away. The technology enhancement, the speed, the capability of candidates picking up on what to do in the hiring process is just going to increase. In fact, Gartner is projecting that by 2028, this is two years from now, one in every four candidate profiles will be fake. One in four. So now the real question becomes, Fran, what the hell do we do? Do we go back to in person interviews? Do we kill all technology? No. Today I want to flip the script and tell you that the problem is not the tech. The problem is not AI. The problem is not the fact that we're not able to catch these candidates. The problem, and this is my personal opinion and some of the research alluding to this, is that fragmentation is our biggest risk. The more steps you have in your process with more pieces of technology or a combination of manual, unstructured, unstructured processes and technology is potentially your problem. Companies getting defrauded are the ones running their hiring across disconnected tools where every stage is a hand and every handoff is a seam, and every seam inevitably becomes a gap. And so we do not need more deep fake plugins, we do not need more point solutions bolted into broken processes. We simply just need to start by looking at how fragmented your current hiring process is. And if you can fix that, because if you can collect as much information up front in a structured way, which I will double click on in a second, the chances of defrauding a candidate are, uh, much better. Can we stop all potential faking? No. Let's go back 50 years without technology at all. Could I still send the wrong person to the in person interview? Yes. Could I still submit the wrong cv? Yes. Could I still lie on my cv? Yes. Okay. We will always be confronted with this. The amplification of the problem is just so much higher right now. And so therefore this episode today is just to show and share with you how we can take a, ah, fragmented process, collapse it into a unified system and then try and at least help with these gaps, these seams in the process from a frauding and a fraudulent perspective. So what am I saying? If your attraction strategy is not talking to your ats, that is not talking to your video interview, that is not talking to your assessments, that is not talking to your in person interview, that's not talking to your reference checks. If all of these areas are fragmented, if they don't belong together, if they don't talk to each other other, if the data isn't shareable across and lives in one ecosystem, you are opening up yourself for gaps. And these gaps are, are where the fraudsters live in. It's where they thrive in. So ladies and gentlemen, the fix is not more tools, the fix is not less technology or to let go of technology entirely. The fix is a unified system. Five layers, every layer feeding into the next. So let me walk, let, let me walk you through what I mean. All right, the five layer defense system. Defense number one or layer number one. Have you thought of candidate attraction and application being a lot more structured? Think of this for a second open job ad posted anywhere and everywhere. A single email address that I can send whatever I want to send to you failed before the game even started. What we must do is a structured custom application process where the candidate only sees what is required once the journey starts. No more thinking and having AI help draft the perfect cover letter with the perfect perfect CV printed in PDF mailed to an inbox. No, let's create structure, let's create customization and let's only ask for the information that we need upfront. In fact, ditch the cv, go with a custom application form. Now for your second defense layer number two, skills and knowledge based assessments. This is where we ditch the power of the fake perfect CV by going straight into asking questions that are timed around job knowledge and job skills with right and wrong answers. The moment you create a time based assessment that you cannot prepare for, that you cannot redo, you do not have enough time to go to ChatGPT or to claw to go and type in review what the answer is. Look back at the webcam or at the screen and answer your question. You are testing for true knowledge, skills and experience and that is where you want to go to. From an unstructured perfect CV that is open to the world to straight into job knowledge and skills layer number three, valid and reliable psychometric assessments. Now when you think of psychometric assessments, if you've not done them before, I always advise our clients and this is how I was taught by the best in the business. You want to look at a multi holistic facet approach. Personality, cognitive ability, learning agility, emotional intelligence, uh, strategic ability, all matched to the requirements of the role. So a competency profile. Now your battery can be different depending on the level and your budget. But if you can look at more than one thing, you can start cross correlating evidence from the psychometric assessments to other data points in your hiring process. Let me make it practical. If Johnny says on his CV he is a team player, the psychometrics will show you a score on this candidate's preference to either work alone or work in a team. Now really, really important. Your assessments need to be valid and reliable. They need to be classified, they need to actually have norms that represent the group that the candidate is part of. And then from there these assessments, the reliability, the predictive reliability in terms of job performance are extremely high. Go and check out the show notes. If someone says something about themselves in the interview or on their documents or even in the application form, you have the psychometric data to valid, cross question and probe on it, adding science to your process and reducing the potential for fraud defense. Number four, a structured interview. Now I've spoken about this a lot, but what is this concept of a structured interview? A structured interview is an interview with interview questions designed by subject matter experts that ask questions about the requirements of the job as well as the organization's culture and environment. Fit or all the candidates get the same questions through something like a video interview, a uh, one way video interview. They've got the same time to think, they've got the same time to answer. They cannot redo their answers over and over. They cannot go and practice. They cannot ask AI or chat. You will see their eyes going off screen and coming back on screen if they reading the answer. You create a structured environment. You ask questions only about the requirements of the job or the environment of the organization. And we get rid of coffee chats. Ladies and gentlemen, if you want to run a coffee chat, run it at the end of your hiring process. With your top two candidates where you're actually just looking for energy and chemistry. But the moment you open yourself up to a two way unstructured coffee chat early in your process, you're going to be influenced by charisma, you're going to be influenced by energy, you're going to be influenced by someone sharing something that resonates with you and that sets you up for potential fraud. And then lastly, layer number five, defense number five is identity verification and background checks through a credible source in a single unified system. I spoke spoke earlier in the seven fraud vectors about a reference score. What I'm referring to here is id, criminal credit offence, um, fraud checks, uh, world Fit and proper checks, all of these checks that phenomenal providers, especially in South Africa provide you, that you do in your hiring process. And often I know there's a cost associated, but often we only check the very last person and we hope that the check returns, you know, no criminal record or no offense, but if you could maybe break that open and you can use a single unified system that easily allows you to fire off a check like a criminal check on your shortlist already, think of the time and the money that you're saving by not progressing with Fran. If my fraud or my criminal check came back and I failed the check, but the ability to trigger and fire that or from a system where the data returns back into the place where all your other data points are lying is reducing the fragmentation. It's speeding up the process because you've gathered all the information that you need upfront in the application process to be able to in real time return a check so that you can progress with the actual candidates that aren't fraudulent. That is the fifth defense in our defense layer. Okay, so let's summarize this. Can you prevent total fraud and total cheating? No. In my opinion, you can't. The world of tech and the tenacity of people to try and catch out systems will never stop. But what you can do is consider your hiring infrastructure, the technology, the system that you are using, are there gaps? Are these gaps also filled with manual steps in between? Are these gaps and manual steps opening you up for potential fraud? I think the answer in today's episode and the research is a clear yes, they are. So in my mind, organizations are either going to continue doing this and just hoping that it doesn't happen to them, which is highly unlikely, or you could pivot and really go into uncovering and understanding your tech stack and, and considering a unified system, a system that's airtight where the data collection is in one place, where most of the data gets gathered in one go, upfront, where there is science based in the system, in the process, in the hiring funnel, where you are screening out on not only job requirements, but you're also allowing and uh, uh, actually not allowing the candidate to give you what they want to give you, but just simply asking them what you need based on what you understand the role requires. I believe organizations that are going to focus on that in the future while adhering to some of the foundational principles that we spoke about in today's episode. These are the organizations that are going to minimize fraud. Are you going to completely get it out of your system? No, you're not. The point here is to minimize that and to increase your chances of actually hiring the friend who started the application journey. Thank you so much for listening to this episode. This was a bit of a technical conversation. I can imagine. There are so many thoughts, uh, from you, the audience, the listeners. Please pop us a comment, head over to our website, reach out to me on whatever social platform. Uh, let's really get this conversation going. Are you seen fraud in your organization? Are you part of those percentages? I mentioned? 4 out of 10 organizations who admit that they've appointed a fraudulent person. If so, if you want to share your story, engage the audience, please feel free to do so. Thank you for following Solving the People Puzzle and I can't wait to hear from you until next episode. Ciao. Thanks so much for listening to Solving the People Puzzle. If you enjoyed today's episode, can you please go and like subscribe and even leave us a five star rating? If you have any questions around how to create the ultimate endtoend hiring solution, head over to Whamly IO so that we can help you hire better people faster. Catch you next time.