Would I Lie to You? How Loan Fraud Data Can Help Reveal Job Application Fraud
Honesty is the best policy. While almost all would agree with this in principle, in practice quite a few people leave this tenet behind when it comes to job applications. According to some estimates, more than 30% of job applicants engage in some form of fraud in the job application process through intentional falsification of information provided to a prospective employer to increase the candidate’s chances of being offered a job.
Job fraud comes in all shapes and sizes. It may include overstating how long a candidate worked for a particular employer, exaggerating the level of proficiency in certain skills, or inflating the candidate’s salary history. It might also mean including completely fictitious job references or job skills. The recent expansion of remote workers combined with a shortage of tech personnel, for example, have created opportunities for fraudsters to fabricate their experience, successfully land high-paying jobs, and then be so bold as to outsource their work to others. Some job fraudsters are accepting more than one remote position, doubling their pay, while hiding the duplicity from both employers.
The cost of these practices to businesses can run into collective hundreds of millions of dollars. Aside from potentially over-compensating the fraudster, employers who are duped also deal with the loss of productivity and costs of re-training. Even if the employee doesn’t last long, the damage is done, and the employer must start over to fill the role.
Job fraud is becoming more difficult to detect. Fake employment verification services have become a dime-a-dozen. Employers need new tools to weed out fraudsters. In addition to requiring references and verbal verification of previous employers, best practices include asking more specific skill-based questions during interviews and implementing skills tests. Here, too, the conman (or con-woman) has gotten more sophisticated. Some applicants have hired coaches to help them through the interview questions and still others have had the coach do the interview for them. Background checks, while not cheap, can help considerably to ensure the applicant’s education record is accurate, no criminal background is present, and they are truly who they say there are. If employers are using staffing and recruiting companies, they need to know which of these preventative measures are being done for them, and which they still need to do in-house.
How Might Loan Data Help?
Closely related to job fraud are ‘income fraud’ and ‘employment fraud’, which are commonly found in consumer lending (e.g., auto loans, credit cards, home loans, etc.). Here, again, the bad actor is falsifying their employer, occupation, tenure, and/or salary information. This time to obtain a loan they would otherwise not qualify for. Interestingly, some estimates put the rate of misrepresentation of data on the loan application at nearly 25% for millennials, which is eerily similar to the job fraud rate estimate cited earlier.
Appreciating the similarities between job and loan applications is important because the powerful, proven fraud prevention data and tools used in the consumer loan arena can be leveraged in mitigating job fraud. Specifically, data consortiums powering sophisticated data models have revolutionized fraud detection in consumer loan markets. Might that same approach help with uncovering job fraud?
Imagine you are a prospective employer. A candidate’s background check and employer verification checked out. Roles and salaries also sync up. So far, so good.
What if you had access to a data source that exposed that the applicant’s current employer is a known fraudulent entity that has been used on multiple credit applications that led to default (see figure 1)?
Another candidate appears to have the skills and experience you are looking for. Background checks are clean. The last two employers have been contacted and have verified the candidate’s employment.
What if you had access to a data source that revealed the applicant recently submitted a credit application listing the same current employer as found on his resumé, but with a significantly different salary (see figure 2)? Did the individual move from ‘warehouse manager’ to ‘web developer’, and double their salary, within the same company that quickly? Perhaps there is a legitimate explanation, but this additional information may provide an opportunity to further validate and clarify any perceived discrepancies.
Honesty, is indeed, the best policy. Sadly, there is another axiom that has proven true…‘Where there is money, there will be greed. Where there is greed, there will be fraud’. Fraudsters will continue to take advantage of weaknesses in all systems and processes where there is financial gain to be had. Leveraging our collective, combined data resources is a proven, effective tool to combating fraud at all levels.
See how a data consortium of loan application information is changing how auto lenders streamline loan decisioning and contact us to explore new ways this data may be used to prevent fraud, including job fraud.