Employee Verification: Why Verifying Remote And Gig Workers Are Critical

Here’s what can be done to combat the problems

Are you certain that your employees are who they say they are?

Perhaps that sounds alarmist, but employee fraud is very real. Action Fraud UK states that nearly one in five businesses has been defrauded by an employee. 

Increasingly, there are also opportunities and ways for people to exploit companies by using false identities. 

The widespread rise of remote working and the increasing use of freelancers play a significant role. Nowadays, more and more people work for companies without the need to turn up to an office and “show their face.” 

Long gone are the days when bosses and HR teams would, by default, know everyone in person, perhaps even socializing with them and becoming acquainted with their families. 

Furthermore, there’s an increasing trend towards global and “remote by default” teams. Many companies, very often tech startups, pride themselves on this way of doing business and make it a key part of their company culture. It allows them to access a pool of global talent and provide flexible working options to attract the best people. But it also puts them at more risk of identity fraud. 

In this article, we look at the increasing importance of employee identity verification and background screening – both as part of the hiring process and on an ongoing basis when working with remote teams and freelancers. 

What Problems Can Occur?

Failing to verify the identity of everybody working for your company can lead to all kinds of issues, from compliance problems to the risk of fraud or corporate espionage. 

On the compliance side, there’s the danger of employing people who don’t have the correct work permits or professional qualifications. Deceitful practices around location are also surprisingly common. 

Remote employees or freelancers can use technology like VPNs to appear to be in a different country. The implications of this can be relatively trivial, such as a legitimate employee working from their holiday home without authorization. However, it can also involve the risk of hiring somebody in a completely different part of the world to where they claim to be. 

This can have knock-on effects regarding everything from taxation to valid insurance.

While “fraud” often leads people to think of financial fraud or the stealing of company secrets, there’s also the risk of working with completely different people to those you thought you were. This is a particularly prevalent risk with freelancers. 

“Drop servicing” is the practice of taking on freelance work, and further outsourcing it to third parties. This is fine when done transparently, as described here by Wise. However, it also happens illegitimately, without the end client’s approval or even knowledge. 

A freelancer can apply for work with a client, win the gig, and complete it themselves, to begin with. They then replace themselves with a worker who may not have the same skills and qualifications or may not even be in the “correct” country. 

There are clearly all sorts of different risks around false (or tweaked) identities, but what can companies do to mitigate them?

What Can Be Done to Combat the Problems? 

Broadly, there are two sides to combating the problem: 

Firstly, it’s crucial to verify the identity of all new recruits – both employees and freelancers. 

Secondly, in situations where people aren’t attending an office regularly, it’s important to have a way to check that they are consistently who and where they say they are.

As with so many things these days, you have a choice of performing manual checks and using technology to automate some of the processes. A hybrid of the two methods proves most effective and is often recommended by fraud prevention vendors.

Basic identity checks, with passports, driving licenses, and birth certificates, are something HR teams have been carrying out for decades. Often, their completion is mandatory for compliance reasons, to verify individuals’ credentials and ensure they have the right to work. 

With remote and global teams, there is also now the option to use automated or outsourced services for employee identity verification. Freelance platforms use such systems, but they don’t altogether mitigate against things like drop servicing, as described above. Ultimately, every company needs to be carrying out thorough checks of its own. 

Another useful tool for the armory is digital footprint analysis. This allows you to find extensive data on an individual from something as simple as an email address or telephone number.

For example, a prospective employee or freelancer may provide a “local” phone number. However, it’s very simple to acquire something like that from a service like Skype, making it easy to appear as though you’re based in London or New York. Identify verification software can quickly alert you to things like that, triggering further checks. 

Similarly, you can check whether people’s email addresses are legitimate and that they are logged on from where they say they are.

Tools like this allow you to do manual lookups, but you will also be able to integrate some of them with your wider IT infrastructure. For example, using an API, you may be able to integrate employee verification as part of background screening in your human resources information system (HRIS).

As we noted above, it’s not only about checking people who they say they are during the recruitment process. You also need to check they are not “swapped out” for other people while they’re working for you. 

For instance, with IP analysis the system can alert you if your London-based freelancer suddenly logs on from Asia, triggering you to do some checks. Perhaps, that person is simply working while on holiday – but there may also be something more underhand going on. Again, you can use manual checks or integrate authentication into how they log on to your corporate systems.

Working with “fake” employees may seem like the stuff of science fiction, but it’s really not. Remote working, gig working, and the rise of global teams all bring with them a certain layer of anonymity. You best believe that fraudsters already seek to exploit that. 

Gergo Varga has been fighting online fraud since 2009 at various companies – even co-founding his own anti-fraud startup. He's the author of the Fraud Prevention Guide for Dummies – SEON Special edition. He currently works as the Senior Content Manager / Evangelist at SEON, using his industry knowledge to keep marketing sharp, communicating between the different departments to understand what's happening on the frontlines of fraud detection.  Visit SEON Connect Gergo Varga