Are reference checks exposing your company to fraud?

Are reference checks exposing your company to fraud?

Are reference checks exposing your company to fraud? Chasing references over the phone and via isn’t just wasting your time: your company might be vulnerable to hiring fraudulent jobseekers.

The issue is more widespread than you’d think, with websites selling fake references, and nearly three in 10 Canadian employers reporting having caught a fraud.

“It happens an awful lot in recruitment,” says Lee Seymour, who founded reference checking software Xref in 2010 after a dodgy consultant at his then-employer – a major recruiter in Australia – faked references for a candidate who was seeking a job at a large bank.

“They were hand-written, they were glowing references, they both sounded the same. I put them in front of the consultant and he said ‘yeah, they’re fake’.

“The bank was interested in the candidate, the candidate wanted the role, but the candidate was simply not referenceable … He faked the references to get the candidate in and make the $20,000 fee, and it came back to bite him.”

The incident spurred the creation of Xref, an automated system that not only takes the chase and anxiety out of referencing, but flags possible fraud in ways that a phone or email reference would totally miss.

The employer simply requests referees’ email addresses, the candidate adds them, and Xref does the rest via automation. And if the jobseeker tries to submit phony references, the system is built to catch them.

“We monitor what device, what browser, what wifi, where they are geographically when they’re on our platform,” Seymour says.

“If [a candidate] puts in a Hotmail address for their referee, and then two minutes later, opens the request on the same wifi or geolocation, we are going to flag a potential fraud.

“We found one a few weeks ago where there was a question about honesty, and both referee one and referee two had typed ‘he is honesty’ (sic), and we saw that it was cut and pasted into each box in the same location.”

As well as slashing the time taken to chase references, companies save money on onboarding and salaries for workers who can’t do the job they were hired for.

“The traditional method of referencing just doesn’t help with breaches in privacy, fraud, and discrimination. It doesn’t give the candidate a good journey. And it doesn’t give the referee time [to prepare],” Seymour says.

“In a blink of an eye, [employers] can make a data-driven decision on that candidate, rather than a gut-driven decision.”

Related stories:
Can I take legal action over a misleading reference?
The legal risks of giving a bad reference