Case Studies

Material falsehoods on rise

by Mark Rowe

CIFAS says its staff fraud database in the first half of 2012, compared with 2011, showed a notable increase in those recorded for employment applications containing serious material falsehoods.

The counter-fraud body describes ‘Material falsehoods’ as those whose impact is far greater than a simple untruth: where the nature of the falsehood had a definite impact on the application (eg. an applicant saying a previous position had ended for career development reasons when the applicant had actually been fired).

Issues

The dangers posed to an organisation by fraudulent applications for employment may be difficult to define simply. But, as CIFAS Staff Fraud Adviser Arjun Medhi says: ”Such frauds are not defined by minor discrepancies in qualification history or CVs and forms where the applicant has slightly exaggerated their skills and experience. These are cases where the ramifications of the falsehood not being discovered might have profoundly damaging consequences: e.g. employing an individual previously dismissed for theft in a position with access to customer funds.”

As economic and employment problems persist for many, increases in fraud of this kind are unsurprising. The increase underlines, CIFAS adds, the importance of proper vetting procedures and checks. Establishing that an applicant is who he or she claims to be (in terms of identity, professional qualifications and employment history) is essential in ensuring that a position is taken by a suitable candidate, as opposed to one more likely to cause further (deliberate or unwitting) damage.

The dangers for individuals must also not be overlooked. Arjun Medhi says: “With competition for employment still fierce, it is understandable how some individuals might be tempted to pursue this course of action. They should not underestimate the consequences, however; as committing fraud to obtain employment can result not only in dismissal but also – potentially – in criminal charges; exacerbating the difficulty in obtaining employment. In such circumstances, honesty really is the best policy.”

Chris Webster, Risk Manager from Yorkshire Building Society (a member of the CIFAS staff fraud database) adds: “’Time and time again, our organisation sees individuals who fail to disclose important material information in support of employment applications: whether this is an undisclosed adverse credit history or wholly inaccurate information on CVs and applications. In these cases, not only are these applicants wasting the recruiter’s time but also their own. Therefore honesty and full disclosure is always the best course of action: if in doubt, spell it out!”

CIFAS has 260 member organisations in banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and share dealing. Members share information on identified frauds. Other schemes modelled on CIFAS have been set up in Southern Africa and Germany. CIFAS launched its Staff Fraud Database in 2006, which has 91 members covering 239 organisations sharing information on frauds that have been perpetrated against CIFAS staff fraud members. CIFAS members must investigate and reach a ‘burden of proof’ (i.e. there must be evidence of an identifiable criminal act) before filing to the staff fraud database. More than one reason for filing a fraud can be identified, meaning that the total number of reasons can differ from the number of staff fraud cases identified.

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