As an employer, how can you reasonably gauge how likely it is that someone will commit fraud against your business? Companies lose millions of dollars per year to white-collar crime, but identifying and mitigating risks that lead to these crimes is a complicated task. It could be as simple as identifying a past fraud conviction on an applicant's background check or considering personal situations which could create the temptation for an employee to steal.
Are credit checks the answer?
As with background checks, the information on credit checks is not a guaranteed predictor of future behavior. However, these checks can still be an essential resource—when employers use them in combination with a thorough interview process and other pre-employment vetting tactics. The key to sufficient credit checks is understanding their limitations and knowing how to build on the information that they reveal.
Build Your Hiring Process on Firm Legal Footing
Before you consider ordering credit checks from a resource such as backgroundchecks.com, it's vital to understand the legal restrictions that may limit your business in this area. Credit reports are highly regulated even compared to background checks. Not only is there the federal Fair Credit Reporting Act to consider, but many states also have their own rules in place to protect consumer information and curtail employment discrimination.
To begin using credit checks, develop a clear understanding of your obligations under the FCRA and state law. You must obtain an applicant's consent for a credit check, and some states may further restrict use based on job type or duties. Always understand your role in notifying applicants about these steps.
Consider All Possible Sources of Financial Crime
Successfully using credit checks to protect your business from bad actors requires a broad and consistent application of policy. Only screening employees that you hire for full-time positions means leaving a hole in your defenses. When you rely on contractors or outside vendors, demanding a vetting process from each agency that aligns with your business’s vetting standards is a critical step.
Remember that circumstances may change after an employee comes aboard; knowing how to watch for signs of financial pressure in the future is just as vital as identifying them pre-hire.
Avoid Operating on Assumptions
Which conclusions should you draw from a credit report? You may learn that someone has a high debt load or bankruptcy in his or her past. Rather than using these factors as automatic disqualifiers, use this information to develop questions to explore with the applicant during an interview.
Many people carry debt, and there could be understandable reasons behind it, such as a health scare leading to loss of income or another unexpected life event. View credit checks as just one piece of the puzzle as you evaluate whether an applicant poses a high level of risk.
Choose the Right Tools
With a legally sound procedure in place and a sense of where to go after performing credit checks, your business can reduce opportunities for white-collar crime. backgroundchecks.com provides fast and effective credit checks alongside other essential background reporting products. Equip your business to more thoroughly evaluate applicants as you build a trustworthy team.
About Michael Klazema The author
Michael Klazema is Chief Marketing Technologist at EY-VODW.com and has over two decades of experience in digital consulting, online product management, and technology innovation. He is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments.