Hiring the right person is essential for any organisation, but the process is complex for HR professionals in India. Employment fraud, a growing menace, has made the task even more challenging. According to identity verification startup IDfy, cases of employment fraud have surged from 3% to 9% over the past three years.
Employment fraud: What’s happening?
Fake employment certificates have become alarmingly common. These documents are not only affordable and easily accessible but can also be produced within hours. Sectors like banking, financial services, insurance (BFSI), e-commerce, and staffing are particularly vulnerable.
How much do fake employment certificates cost?
According to IDfy, there are three options
Option 1
Cost: Rs 7,500
This will include
— Appointment letter
— Salary slips
— Increment letter
Option 2
Cost: Rs 15,000
This will include
— Appointment letter
— Salary slips
— Increment letter
— Relieving letter
— Experience letter
Option 3
Cost: Rs 20,000
This will include
— Appointment letter
— Salary slips
— Increment letter
— Relieving letter
— Fake Form 16
— Fake Bank Statement
How are the frauds carried out?
“The worrying aspect is that the people enabling such frauds are now following a systematic pattern,” says Ashok Hariharan, Co-founder & CEO of IDfy.
IDfy’s investigations reveal that obtaining fake experience certificates often starts with a simple Google search for “employment certificates in India.” These searches lead to entities offering such documents. When IDfy reached out to one of these entities, they received a prompt response, detailing the process and payment method. Within 24 to 48 hours, they were promised a fake employment document.
What makes this fraud sophisticated is the presence of a valid website, phone number, physical address, and even a registration with the Ministry of Corporate Affairs’ database. IDfy uncovered over 25 vendors providing fake documents from more than 1,000 companies.
Hariharan explains the two main methods used:
1. Shell companies
These are created solely for revenue generation, with no physical presence or operational activities. Individuals can obtain experience certificates from these fictitious organisations.
2. Shadow companies
These entities have names resembling genuine companies or MNCs. They register with names that are almost identical to real companies, often misleading people by omitting “Pvt. Ltd.” or similar suffixes, making it easier for fake certificates to pass background checks.
Fraud detection methods
Background verification companies trace patterns to detect fraud. Shell companies often lack a substantial operational presence, and shadow companies might claim to operate from co-working spaces or remote locations to avoid physical verification issues. “IDfy’s investigation revealed no real physical office attributable to the business and no operational activity,” says Hariharan.
However, they haven’t completely cracked the system, as payments through the Employees’ Provident Fund Organisation (EPFO) are transparent and cannot be easily disguised.
Sector-wise statistics
1. Banking, Financial Services & Insurance (BFSI)
Address checks red flags (10.7%): Shifted address, untraceable address
Experience checks red flags (9.5%): Incorrect last working day, date of joining discrepancies, pending exit formalities, fake documents
2. Consulting (3.02%)
More likely to submit fake experience certificates to meet role criteria
3. Consumer Products (7.78%)
Fake employment documents, incorrect working days, pending exit formalities
4. Healthcare (4.55%)
Fake employment documents, incorrect working days, pending exit formalities
5. IT/ITES (3.37%)
Incorrect last working day, date of joining discrepancies, pending exit formalities, fake documents
6. Telecommunications (5.73%)
Fake employment documents, incorrect last working day, non-existent company, still active in the previous company
7. E-commerce & Logistics (15.25%)
Gig workers from remote locations make physical address verification difficult; non-existent addresses, candidates leaving jobs before verification
8. Staffing and Recruitment
Address checks red flags (15.48%): Shifted address, untraceable address
Experience checks red flags (14.62%): Incorrect last working day, date of joining discrepancies, pending exit formalities, fake documents
City-wise percentage of employment frauds
Bangalore: 9.3%
Chennai: 9.4%
Hyderabad: 7%
Pune: 6.3%
Mumbai: 6.7%
Age-wise distribution
1980 to 1985: 5.2%
1986 to 1990: 7%
1991 to 1995: 7.6%
1996 to 2000: 9.7%
2001 to 2005: 9.6%
1 in 2 graduates not employable in India
Employment fraud is a growing pain for HR professionals in India. The sophistication of these fraudulent activities, coupled with the availability of fake documents, poses a major challenge. Meanwhile, the findings from the Economic Survey 2024 highlight a pressing need for skill development among the youth, ensuring they are adequately prepared for the job market.
Sixty-five per cent of India’s fast-growing population is under 35, and many lack the skills needed by a modern economy. Estimates show that about 51.25 per cent of the youth is deemed employable, according to the Eco Survey 2024 released on Monday.
First Published: Jul 22 2024 | 6:01 PM IST
