Employment fraud

Employment fraud is an attempt to defraud people who are seeking or performing employment by giving them a false hope of better employment, often with higher wages. Employment fraud involves activities such as fraudulent representation of income to a borrower who claims self-employment in a non-existent company or who claims a higher position such as that of a manager in a real company. It also includes promises such as easy hire, easy work, high wages for unskilled labor, flexible hours, and a small number of hours paired with a lot of free time.^[1]

Fraud

Recruitment fraud involves persons misrepresenting themselves as acting on behalf of an employer to offer fictitious job opportunities. The fraud is generally conducted through the internet, such as through false and illegal "copy-cat" websites or through unsolicited emails claiming to be from the employer.

Identifying fraudulent and fictitious job offers

The perpetrators will usually ask recipients to complete recruitment documentation, such as job application forms, terms and conditions of employment or visa forms. The company name and/or logo may be included (without authority) on the documentation. There are usually various requests for personal information, such as address details, date of birth, CV, passport details, bank details. Candidates are requested to contact other companies/individuals such as lawyers, bank officials, travel agencies, courier companies, visa/immigration processing agencies etc. Email correspondence is often sent from (or responses requested to) free web-based e-mail accounts such as yahoo.com, yahoo.co.uk, gmail.com, hotmail.com, hotmail.co.uk, or live.com. The perpetrators frequently use mobile or platform telephone numbers beginning with +44(0)70 instead of official telephone numbers from the company they are pretending to represent. The perpetrators ask the candidate to make certain payments to progress the job application, for example, in respect of work permits, visas, and travel arrangements. Genuine employers do not request money transfers or payments from applicants to secure a job, either as an employee or as a contractor.^[2]

Types of fraud

One type of employment fraud happens when a contractor is hired for a duration, verbally promised additional compensation, and then has the compensation and the evidence denied for the purposes of terminating the contract with the contractor.

Examples of fraud

• Stealing money from the company bank account – the perpetrator having got away with this once, will try it again and again.
• Manipulating sales figures so as to reach target and achieve bonus – a simple version of this involves booking sales in one month then crediting them back the next. Naturally, unless the perpetrator keeps this up, the overstatement in one month will be shown as a shortfall in the next.
• Falsifying supplier invoices – one case I have on record involved a senior manager who had renovation work carried out on his house. He then arranged for the invoices to be sent to the company, booked as costs for work carried out on company premises.
• Theft of stock – a time-honored way to make a 'fast buck'. The perpetrator will over a period of time abscond with a number of items from the warehouse, and resell these. So long as the stock losses are within tolerance then it is possible for this to remain undetected for a significant period of time.^[3]
• Another type of employment fraud is when a criminal creates a form of false advertising. Any advertising or promotion that misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities which lures unsuspecting victims into a situation where, out of desperation or lack of knowledge, they are tricked into committing a crime or become a victim of a crime such as identity theft, embezzlement or similar types of fraud.^[4]

Types of employment scam

Mystery shopper

The victim applies to be a mystery shopper. They are asked to test a money wiring service such as Western Union, and to report back on the experience. In reality, they are helping to launder money and could be open to charges of being a money mule.

Payment administration

The victim is asked to handle payments on behalf of an overseas company, earning a fee for every payment handled. the companies turn out to be a front for illegal activity – again potentially landing the victim in trouble with the law.

Guaranteed employment/income scams

The victim is guaranteed a certain level of income or employment. To get this they first have to buy something like a business plan, start-up materials or software. They may also be asked to pay money to be put on a directory to 'guarantee' jobs. This is in fact merely a way to get the victim to spend money – there is no job waiting at the end.

Multi-level marketing

People selling through a multi-level marketing scheme get commission on the sales of those they recruit, as well as on their own sales. Some multi-level marketing schemes, like selling Tupperware, are legitimate business models. But some multi-level marketing schemes are pyramid schemes in disguise. The products are of poor quality, overpriced and hard to sell, or the victim may be asked to spend a great deal of money on training materials that are completely useless.

Visa/work permits

A prospective employer overseas says that they'll handle the victim's work visa application. But the victim has to send them the money to process it. Again, this will simply result in the scammer taking the money and vanishing.^[5]

How to resolve the issue

If employment fraud is suspected, one should seek legal advice immediately. Whilst the main aim will be to obtain evidence that will stand up in court, one should proceed with caution. There is a risk of being taken to an employment tribunal should one's suspicions prove incorrect or should one act in a way that breaches an employee's employment law rights. In addition, the way one gathers evidence or checks personal data on employees must comply with the Human Rights Act and the Data Protection Act. Employers should always carry out a full identity check on any new employee.^[6]

Employment trends

Crime and fraud issues in international trade

Theft of goods, money laundering, cyber crime, employee fraud, infringement of intellectual property. Businesses in international trade face a growing threat from crime. Fraud is deceit for financial profit and has cost the UK economy more than £38 billion in the past year (source: National Fraud Authority – annual fraud indicators January 2011). Currently the main threat to international traders is fraud from organised crime, including theft of your goods or your business identity, cross-border crime and road-freight crime. Other risks include infringement of intellectual property or employee fraud.^[7] The rise in online trading has created new forms of criminal activity, such as new ways of laundering money. Businesses in the EU can rely on shared laws and commercial procedures to protect them. This action-based guide explains the key risks involved, how to reduce them, and what to do if their business is targeted.^[8]

See also

• Work-at-home scheme

References

1. In-text: (Definitions.uslegal.com, 2014) Bibliography: Definitions.uslegal.com, (2014). Employment Fraud Law & Legal Definition. [online] Available at: http://definitions.uslegal.com/e/employment-fraud/ [Accessed 29 Oct. 2014].
2. Lundin-petroleum.com, (2014). Employment Fraud - Lundin Petroleum. [online] Available at: http://www.lundin-petroleum.com/eng/recruitment_fraud.php [Accessed 29 Oct. 2014].
3. Frost, K. (2012). Top ten types of fraud. [online] Metro. Available at: http://metro.co.uk/2012/10/09/top-ten-types-fraud-3817034/ [Accessed 29 Oct. 2014].
4. TheFreeDictionary.com, (2014). False Advertising. [online] Available at: http://legal-dictionary.thefreedictionary.com/False+Advertising [Accessed 31 Oct. 2014].
5. Cps.gov.uk, (2014). Fraud Act: Legal Guidance: The Crown Prosecution Service. [online] Available at: http://www.cps.gov.uk/legal/d_to_g/fraud_act/ [Accessed 28 Oct. 2014].
6. Nelsonslaw.co.uk, (2014). Employee Fraud: Warning SignsSolicitors: Nottingham, Leicester and Derby UK. [online] Available at: http://www.nelsonslaw.co.uk/site/library/commercialclient/employee_fraud.html [Accessed 29 Oct. 2014].
7. Gov.uk, (2014). Investigations and enforcement: what we do, our outcomes and complaints - GOV.UK. [online] Available at: https://www.gov.uk/government/collections/insolvency-service-investigations-and-enforcement-what-we-do-our-outcomes-and-complaints [Accessed 29 Oct. 2014].
8. Gov.uk, (2012). Crime and fraud prevention for businesses in international trade - Detailed guidance - GOV.UK. [online] Available at: https://www.gov.uk/crime-and-fraud-prevention-for-businesses-in-international-trade [Accessed 29 Oct. 2014].