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8% of Employees Pose Fraud Risk, New Report Reveals

In the midst of determining the real from the fake, IDfy, India’s leading Integrated Identity Platform, released a report on “Background Verification Insights,” which analyzed 2.5 million background verifications from the past year across multiple industries. The report shows how industries choose specific checks suitable for their needs based on the challenges they face. It also anticipates further measures to be taken to avoid possible fraud.

The most commonly conducted background checks include criminal, qualification, address, and experience verifications to determine the right hire. IDfy analyzes data on the checks that are most conducted in each industry, and the number of checks that come back as definitive “do-not-hire” red cases.

The report unveils the data based on green, amber, and red cases. Green signifies a clear path to hire, where all candidate details align with verified documents. Amber indicates insufficiencies, highlighting missing or incomplete information in the submitted documents. Red flags a definitive “do not hire” status, signaling discrepancies such as mismatches in dates, names, or addresses between submitted details and verified documents.

According to the report, the industries with the highest percentage of high-risk (red) cases— a startling average of 7.8% of all cases—were BFSI, e-commerce, and staffing. Across all industries, employment fraud—including the submission of certificates from banned organizations—was one of the main causes of red cases. (Some agencies in India also provide fake documents from unregistered companies or companies with dormant revenue for over 3 years, encouraging this trend). In the BFSI sector, red cases for address verifications were the highest at 10.7%, followed by 9.5% in experience checks.

Ashok Hariharan, CEO and co-founder of IDfy, states, “Integrity and diligence in recruiting methods are critical aspects that firms must consider as we negotiate the complexity of today’s recruitment landscape. The alarming average of 7.8% red cases in important industries like staffing, e-commerce, and BFSI highlights the necessity of thorough background checks in the hiring setting that exists today. IDfy remains committed to offering sophisticated solutions that protect companies from fraud while promoting an environment of accountability and trust.”

Companies’ reputations in the staffing and recruitment industry are mostly dependent on the caliber of candidates they recruit for their clients. Since red cases in this industry occur at considerably high rates—15.48% in address verification and 14.62% in experience verification—rapid verifications are imperative. Ensuring that candidates are thoroughly vetted builds trust and reduces possible risks for clients, demonstrating the industry’s dedication to providing dependable talent solutions.

When it comes to e-commerce, the report reveals that 70% of background checks are done on off-roll personnel. Nevertheless, the hiring of gig workers is seasonal, typically peaking in the run-up to the festivals. The high percentage of red cases in address checks in this sector, at 15.25%, mainly occurs due to these workers often coming from faraway places where it’s difficult to verify their physical address. Sometimes, the address doesn’t even exist, or the worker has moved on to a new gig before their address can be verified.

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