Deepfakes, fake degrees & AI fraud: Why traditional hiring checks are failing
In an era where talent moves fast, fraudsters often stay one step ahead of compliance, background verification (BGV) has become more than a pre-employment formality. Once regarded as a simple checklist task, it has now become a vital pillar in the talent acquisition and risk management strategy of organisations.
Employee fraud comes with a very real (and significant) cost–it’s a $42 billion crisis. In 2024 alone, 47% of global companies reported falling victim to fraudulent activities, with finance, tech and leadership roles being the most targeted. Fake degree scams have surged by 300% since 2020, exposing the weaknesses of outdated verification methods and indicating that the pandemic has accelerated their scope and scale. Deepfakes, AI-generated credentials and synthetic identities are no longer theoretical threats but tangible challenges that compromise traditional hiring safeguards. With workplace fraud evolving into a multi-billion-dollar crisis, organisations across sectors, particularly finance and technology, are grappling with unprecedented levels of deception.
To understand this shift and re-evaluate the purpose of BGV processes, People Matters partnered with IDfy to organise a riveting roundtable discussion that dissected the key trends, challenges and innovations in background verification and explored what the future demands. Moderated by Mahesh Gera, Group Chief Human Resources Officer at Rustomjee, and Pritosh Desai, CPO at IDfy, the roundtable drew participation from HR leaders across various industries, including BFSI, technology, telecommunications, pharmaceuticals, media, and others.
Here are some key takeaways from the discussion.
The evolving face of employee fraud
Professionals today switch jobs frequently, pursue multiple stints across geographies, and freely engage in freelance or gig work. While this reflects changing aspirations and professional agility, it also creates ambiguity in records, references and employment continuity. This means that the nature of candidate backgrounds has become more dynamic, making verification more complex than ever.
Paritosh Desai, CPO & CMO, at IDfy, started the discussion by discussing one of the most alarming shifts in the background verification landscape, which is the sheer sophistication of fraud. What was once a matter of fabricated resumes has now escalated into a structured racket, complete with fake firms, fraudulent HR contacts, and digitally manipulated documents. These aren't amateur attempts at manipulating images or documents—fraudsters offer “packages” that include employment letters, salary slips, even bank credits to simulate legitimate payroll activity. Interestingly, there has been an uptick in these tactics across senior leadership positions, indicating that fraud isn’t confined to entry-level positions.
The post-COVID-19 era, characterised by slower capacity growth in many private companies and a young population seeking limited job opportunities, has certainly witnessed an increased propensity to commit fraud. Furthermore, the rapid proliferation of generative AI tools, easily accessible and often inexpensive, has democratised the ability to create highly convincing fake documents, such as pristine employment letters or education certificates from non-existent institutions. Deepfake technology has also facilitated fraudulent interviews, where one individual participates in the hiring process, and another, less qualified person, ultimately joins the organisation.
Abhijit Joshi, Vice President, Product Management, also shed light on another way in which the pandemic bolstered employee fraud. Many smaller companies went out of business during or after the pandemic, leaving behind digital infrastructure that fraudsters have since co-opted. With access to defunct company domains and email servers, they’re able to produce convincing verification responses, often within minutes. A closer look, and it becomes easier to identify patterns emerging across fraudulent submissions. Identical fonts, signature placements or a recurring HR contact name across different firms point towards organised fraud syndicates. Fake websites, placeholder content, and generic mission statements serve as additional indicators of fake companies.
This technical accessibility, combined with underlying socio-economic pressures, creates a fertile ground for sophisticated fraudulent activities that traditional BGV processes are ill-equipped to detect. The implications for HR teams are serious, as without advanced detection systems, the risk of onboarding unsuitable or dishonest candidates increases, potentially leading to reputational and regulatory fallout.
Recruiters today face a dilemma: move quickly and risk hiring errors, or take time and risk losing top candidates. In sectors such as technology and banking, candidates often hold multiple offers, and the speed of onboarding becomes a decisive factor. However, BGV processes have historically been slow, manual and cumbersome, which becomes an obvious bottleneck in a fast-paced recruitment cycle.
To address this, many forward-looking organisations are turning to automation, intelligent workflows and candidate-first interfaces.
Tech-enabled BGV
Many have shifted from manual form-filling to OCR-enabled document uploads that pre-fill verification fields, significantly reducing friction and dropout rates. This not only saves time but also enhances the candidate experience.
Despite this automation, some elements, such as address verification, require a human interface. In cases where a candidate may not understand the input process, added assistance can be provided through video or physical verification to maintain data accuracy. This hybrid model, which uses automation where possible but human judgement where necessary, can help HR strike the right balance between speed and trust. It allows businesses to scale their hiring while maintaining rigorous compliance standards and elevating candidate experience.
Timely checks and ethical dilemmas
Traditional background verification processes, largely unchanged since their inception decades ago, are demonstrably failing to address the complexities of modern fraud. By the time a comprehensive BGV report is available, often weeks or even months after a candidate has joined, significant organisational resources—time, money, and intellectual capital—have already been invested. This delay makes it challenging and costly to remove an individual found to have falsified credentials, often leading to internal dilemmas and compromised reputations.
Furthermore, traditional checks frequently overlook crucial red flags because they rely on fragmented and unverified data sources. The absence of a centralised, comprehensive database for employment or educational history in many regions allows fraudsters to exploit verification loopholes easily.
Another significant oversight in many white-collar hiring processes is the frequent omission of detailed legal history checks. While companies prioritise speed and candidate experience, skipping these vital steps leaves them vulnerable to significant risks, including financial fraud, reputational damage, and internal collusion. The reluctance to delve into an individual's legal past often stems from a desire to expedite hiring and maintain a positive candidate journey, but this can lead to severe consequences.
Then, of course, there is the question of how to act if fraud has been detected. Can there be a blanket response to all types of employee fraud, no matter the severity of the transgression? Or does each case warrant an individualised action? Driven by the tensions between the immediate business imperative to fill roles quickly and the long-term need for integrity and risk mitigation, HR needs clarity and unanimity on these questions. While some advocate for giving individuals a chance, especially if the transgressions are minor or if they demonstrate exemplary performance post-hiring, the consensus leans towards a non-negotiable stance on serious fraudulent activities. This also necessitates a proactive approach to due diligence, one that extends beyond initial onboarding to continuous monitoring for criminal or financial misconduct throughout an employee's tenure, acting as an early warning system for potential threats.
Reimagining proactive verification processes
As the nature of work continues to evolve, the frameworks that verify and validate talent acquisition must change too. The future of BGV lies in creating scalable, adaptable systems that function proactively and combine technological intelligence with regulatory compliance and human judgment. While having a unified and authenticated workforce database that collates data points from criminal records, credit histories, employment records, and education can help HR identify high-risk candidates, no such pan-India initiative currently exists. In its absence, organisations will have to collaborate and partner with experts to balance the requirements of speedy checks, candidate experience, and compliance.
Many tech-driven BGV service providers like IDfy, for instance, offer a frictionless onboarding platform that is customisable to tailor verification journeys across industries, verticals, and roles. Behind the scenes, the company has a dedicated fraud investigation team to analyse metadata, investigate suspicious patterns, and maintain a real-time list of thousands of fake entities.
Furthermore, using AI will not just optimise the verification process, but enhance its core capabilities tremendously. From verifying the authenticity of documents to analysing facial liveness and matching photographs to ID cards, AI is increasingly at the heart of a new, frictionless verification model. What’s more, candidate experience also stands to benefit from this evolution. Verification, traditionally a tedious and opaque process, can now become intuitive and engaging. Mobile-first platforms, two-click document submissions and company-branded onboarding journeys ensure that candidates are greeted not with endless paperwork but with interactive systems, making the process faster and more informative.
Beyond verification, organisations also need to be cognisant of the ongoing changes in compliance with data privacy and consent, in accordance with the Digital Personal Data Protection Act (DPDPA). HR leaders need to ensure that their organisations remain compliant from the very first candidate interaction. IDfy’s verification and data framework, for example, is certified under ISO 27001 and SOC 2 Type II standards, underlining its commitment to data integrity and security. This is also the time to set up platforms and forums, bringing together Chief Risk Officers, Data Protection Officers and BGV practitioners to share insights, discuss regulatory grey areas, and co-create solutions. Enhanced peer learning and collective problem-solving among industry competitors can benefit everyone and reduce the risk of hiring fraudulent candidates.
What’s clear is that the future of BGV is not only about identifying the wrong hires; it’s about creating a framework of comprehensive and sustained vigilance. By harnessing the power of AI, creating hybrid processes that combine automation with human oversight, and investing in scalable, flexible and compliant systems, organisations can achieve both trust and velocity. The future of secure hiring lies in a dynamic, adaptive approach where background verification identifies and counters deception, not just a compliance function, but a strategic enabler of trust, speed and resilience.