The real cost of recruitment fraud

15 April 2019, LONDON: Recruitment fraud is costing UK organisations £23.9 billion a year according to new research from national audit, tax, advisory and risk firm, Crowe UK, in conjunction with the UK’s Centre for Counter Fraud Studies.
The report reveals the extent to which fraudsters are infiltrating businesses and foiling traditional recruitment processes. Crowe’s research uncovered an average fraud rate of 0.52% of turnover. Applied across the country, the total annual cost of recruitment fraud to the UK economy is £23.9 billion.

Recruitment fraud – including lying on applications, using false or fabricated documents and/or arranging false references – is allowing applicants to secure positions as senior executives and, even more worryingly, as doctors and pilots.
In one case study, an individual secured a position as a commercial airline pilot based on a fabricated application and was working in the role before the fraud was discovered. Following an investigation, it transpired that the individual was a serial offender with previous convictions. He was caught, prosecuted and sent to jail.
This example demonstrates how employers are continuing to leave the door open to fraudsters by not using simple but effective pre-employment checks.

Costs associated with a bad hire include lost money spent on training and the recruitment process, reduced productivity, internal investigations and disciplinary proceedings, aside from any external sanctions and reputational damage.
Once inside, fraudsters often engage in further misconduct against their host organisations, such as fraud, theft or corruption. With access to sensitive data and private company information, unscrupulous employees pose a serious security threat and exacerbate the likelihood of a data breach.