Risks in Human Resources – Part 1

November 17-23 is International Fraud Awareness Week, a time to raise awareness concerning fraudulent activities and ways to identify and prevent these actions. Identity, tax, and credit card fraud are common types that may stand out. However, how does fraud impact organizations from a human resources and talent acquisition perspective?

Back in June, The HR Executive hosted Brian Sommer, President of TechVentive, who discussed some of the concerns HR professionals and organizational leaders should be aware of when it comes to their practices and technology. He highlighted how fraud is an increasing concern for organizations from false certifications, time theft, and misrepresented resumes. You can watch the full webinar here: The Dark Side of New HR Tech - HR Executive.

The main takeaway is that organizational leaders should be aware of the fraudulent threats that exist and begin strategizing on how to reduce the occurrence of these activities.

Types of Fraud to Be Aware Of: 

1. Fraudulent Credentials/Certifications

Sommer warned that individuals can be lying about their credentials. On January 25, 2023, the US Attorney's Office: Southern District of Florida released a statement that two dozen individuals were charged in a fraud scheme selling fake nursing degree diplomas. Hiring employees with false credentials can be devastating to an employer, especially in roles like these where health and safety are on the line. Employees performing work using fake credentials create risk for an organization, can harm the clients or customers, and affect productivity and quality of work. 

Combating Fraudulent Credentials and Certifications

Verifying credentials is becoming an increasingly important part of the hiring process. While it may feel like an extra, time-consuming step, verifying education and licensing information can ensure new hires are being truthful about their qualifications. If fraud is discovered, it’s vital that organizations address it. According to Resume Builder, out of the 32% of Americans that admitted to lying on their resumes, 29% faced no consequences. Those that faced no consequences were most likely to lie about years of experience. While that isn’t necessarily an egregious lie, organizational leaders need to consider what condoning small deceptions can mean. If someone is comfortable lying on their resume, will they be comfortable lying about their work? 

2. Time Fraud

While remote work can offer employers competitive advantages in hiring and employee satisfaction, there is still much to learn regarding best practices for this type of work arrangement.  A growing problem with remote work arrangements is time theft. According to Forbes, time theft occurs when an employee uses paid work time for nonwork-related activities without authorization. Common types of time theft include extended/excessive breaks, inflation of work hours, personal activities during work time, digital distractions, and buddy punching (a friend punching in for someone else). A further challenge that has intensified with remote work is overemployment. If you search “overemployed” on Google, multiple news articles will appear of individuals working 2,3,4+ jobs to boost their income. While holding more than one job is common and not usually a cause for concern, some of these articles imply that employees are double-dipping their time and most are keeping their additional roles hidden from their employers. 

Technology is being created to help employees deceive monitoring software as well. Employees can purchase “mouse jigglers,” a product that mimics mouse movement and prevents your computer from going to sleep. This is an inexpensive product that allows employees to take extended breaks while tricking monitoring software into thinking the employee is actively working (Blum, CNBC) Although some organizations rely on keyboard or clicks monitoring, it’s another way technology is making it easier for employees to engage in time fraud. 

Combating Time Fraud:

When it comes to overemployment, Sommer recommends completing employment verifications, not just upon hire but periodically throughout the employee’s tenure. However, if this is a strategy your organization pursues, be sure applicable laws are being followed, such as gaining employee consent to run checks and ensuring periodic verifications don’t result in discriminatory practices. While monitoring systems can be useful, they can also be tricked, so having strong management is another important layer for preventing time theft. Leaders should have consistent meetings, schedule last-minute check-ins, and keep their employees engaged. Sommer suggested that those who are secretly balancing multiple jobs will have a hard time attending virtual meetings, showing up for unexpected calls and may display less commitment. 

Technology is shifting the way many of us complete our jobs and AI is making administrative tasks more convenient. That said, it may be wise to perform periodic audits on roles and processes. As technology continues to ease administrative work and change job duties, taking time to perform operational audits can ensure your company is using their financial and human capital resources effectively.

3. Resume Fraud

According to Resume Builder, 32% of Americans admit to lying on their resume. Years of experience was the most common lie (46%), followed by educational background (44%), tenure at previous roles (43%) and embellishment of skills/abilities (40%).

Artificial Intelligence (AI) has only intensified this issue, allowing job seekers to be even more savvy about reflecting false information. This problem is reinforced by Applicant Tracking Systems (ATS) algorithms as employees are lying about their skills so their resumes can make it past automated filtering. AI can effortlessly create resumes intended to pass ATS screenings, whether it’s an accurate reflection of the job seeker’s skills or not. Technology has advanced where it can automate the application process for job seekers as well, from finding job postings that match their interests, filling out applications, and submitting resumes. For example, hrnews reported a Capterra survey found that 53% of UK job seekers are using AI tools to help in their job search. Of those individuals, 77% have used AI to lie or exaggerate their skills on application materials, including skills assessments. While this was a UK study, AI is being leveraged globally creating similar problems for employers everywhere. 

Sommer highlights that those working in talent acquisition must constantly question the authenticity of an applicant. With technology making application processes faster and easier for job seekers, this can create an influx of applicants and in return slow the hiring process. To keep up with demand, recruiters may rely more heavily on technology to do initial screens, creating a cycle where technology is both helping and hurting the process. Relying on technology can also bump out strong applicants or atypical candidates who didn’t meet the algorithms, but still have great qualifications for the role. 

Along with real applicants exaggerating their credentials, AI is making it easier for hackers and fake applicants to exploit the system. A Florida-based company hired a remote software engineer who used AI to fake his identity. This “employee” then shipped his work laptop to a North Korean laptop farm (Martinez, Forbes). Luckily, the team’s IT department detected fraudulent activity quickly, but fake applicants are a concern that is continuing to grow. 

Combating Resume Fraud

Implementing skills assessments into the hiring process can reinforce a candidate’s stated abilities. While this may delay hiring and come at a cost upfront, it can lead to time and cost savings in the long term. Like false credentials, if a new hire lies about their skills, it can result in decreased production, lower quality of work, the need for training, or the need to find a replacement. Also, consider the liability and cost that could be incurred if someone in a safety-sensitive role, such as healthcare providers, pilots, or nuclear plant operators, make a mistake because they lacked the needed skills. 

While technology is a great tool to make processes efficient, it shouldn’t be solely relied on. Keeping human interaction in the hiring process remains vital. Whether an opening is on-site or fully remote, it’s best practice to have at least one in-person interview with finalists. This offers additional safeguards in hiring false applicants and also demonstrates the candidate’s commitment to the role and organization.

Sommer suggests that if you’re using AI to screen applicants, organizations should occasionally audit how well the technology is doing. Have a talent acquisition expert review the same resumes as AI, compare how the technology and professional sorted the applicants, and see how well the technology did at filtering top candidates. If there seems to be a great deal of discrepancy in the results, the screening questions may need to be adjusted.  If you find that the individual and technology screened similarly, you can feel more confident that your technology is helping your hiring processes and not hindering them. 

Fraud in HR and talent acquisition is an evolving challenge that demands vigilance and proactive measures. From fraudulent credentials to time theft and resume fraud, these issues can disrupt organizational efficiency and compromise trust. By implementing robust verification processes, leveraging technology strategically, and maintaining human oversight, businesses can mitigate these risks and protect their teams and operations.

Stay tuned for Part 2 of this series, where we’ll explore additional ways to combat HR-related fraud. Together, we can raise awareness and build stronger defenses during International Fraud Awareness Week and beyond.

Need advice or assistance in HR matters, risk management, or accounting practices? Please contact Herbein + Company, Inc. Our mission is to be your single source solution for successfully attracting, retaining, and developing your human capital. Our expert team is ready to partner with you and passionate about helping your organization achieve its goals! 

Article contributed by Jessica Keck

1. Blum, K. (2022, September 2). How to use a mouse jiggler to make it look like you're working. CNBC. https://www.cnbc.com/2022/09/02/how-to-use-a-mouse-jiggler-to-make-it-look-like-youre-working.html 
2. Capterra. (2023). AI in job applications survey {Survey Data], as reported by HR News.
3. Martinez, A. (2024, July 25). North Korean fake IT worker dupes security firm: A wake-up call for employers. Forbes.  https://www.forbes.com/sites/alonzomartinez/2024/07/25/north-korean-fake-it-worker-dupes-security-firm-a-wake-up-call-for-employers/ 
4. Resume Builder. (2023). 1 in 3 Americans admit to lying on their resume [Survey Report]. https://www.resumebuilder.com/1-in-3-americans-admit-to-lying-on-resume/ 
5. Sommer, B. (2023, June). The dark side of new HR tech [Webinar]. HR Executive. https://hrexecutive.com/the-dark-side-of-new-hr-tech/ 
6. U.S. Attorney's Office, Southern District of Florida. (2023). Fraudulent nursing diploma scheme leads to federal charges against 25 defendants [Press Release]. https://www.justice.gov/usao-sdfl/pr/fraudulent-nursing-diploma-scheme-leads-federal-charges-against-25-defendants