Identity theft can also do a lot of damage to employers

Published 9:00 pm Friday, April 15, 2005

Her resume was detailed and promising.

Her cover letter – superb – persuaded executives that she could easily exceed expectations for the job.

She clicked with everyone during interviews, turning the hardest questions into a consistent sales pitch for the job.

References? Everybody who knew her loved her, including her former pastor.

And her work as a customer records clerk was exemplary and efficient – until the day detectives enforcing a warrant from another state charged her with eight counts of embezzlement and escorted her out the door.

What happened? How did what appeared to be an impeccable hiring process go so wrong?

The company relied on electronic criminal database checks of potential workers, which missed that the promising young clerk had stolen the identity of a former co-worker and used it to get several jobs, including one that allowed her to embezzle $30,000 in pension payments from her company.

The pastor who was very eager to provide a glowing reference? He turned out to be her boyfriend.

“Identity theft is a big threat to us all, but one that also can do great damage to an employer if it does not use effective screening techniques to guard against potentially damaging hires,” said Sandra Brewer, owner of Spokane-based Pinnacle Investigations, an employee background investigation and risk management firm.

“Identity theft is an integral part of 30 to 40 percent of all corporate crime,” Brewer told a meeting of the Snohomish County chapter of the Society of Human Resource Management last week in Everett.

Most companies that screen employees use electronic databases that contain only records of felony convictions and do little to verify the identity of a potential employee. They do so because the checks are quick and are perceived to cost less than extensive employee background investigations.

Current estimates are that only 5 percent of large employers use the more extensive employee background checks conducted by investigators with extensive law enforcement backgrounds working for companies like Brewer’s.

Some companies only investigate nonexecutives, even though managers commit 50 percent of all corporate crime, she said. One Brewer client, a health care facility that had investigated the background of all its nonmanagement employees, asked eight months later to investigate executives as well.

“Imagine the owner’s surprise when we discovered his vice president had warrants alleging nine counts of second-degree theft, and the marketing manager was wanted on eight counts of forgery,” Brewer said.

The first step in employee background investigations is to ensure that potential hires are not using a stolen identity. This is accomplished using updated law enforcement and credit header databases to verify the applicant’s Social Security number. The check also provides an address history for every location the Social Security number was used, and all aliases, maiden and married names associated with the number.

Then investigators search state and federal court records in each county the applicant has lived for records of outstanding warrants, as well as both misdemeanor and felony convictions.

In addition to guarding against negligent hiring, Brewer said companies also can take steps to prevent identity theft, which affects 7 million people annually and takes an average of 600 hours and $1,400 to clear up.

She advises companies to:

* Use alternatives to Social Security numbers to identify employees or customers.

* Update computer security to protect sensitive company data and include the latest in encryption software and server firewalls.

* Review who has access to sensitive company computer data. “Do temporary employees have access? Should they?” Brewer asked.

* Establish a culture of fraud awareness to include a telephone hotline to report internal company crime, and offer protection to whistle-blowers.

* Update employee and manager background investigations every three to five years.

Once criminals steal a person’s identity, they have only a 1-in-700 chance of being caught, Brewer said. If employers got tougher in checking the backgrounds of employees and potential hires, that number could improve dramatically.

Write Eric Zoeckler at The Herald, P.O. Box 930, Everett, WA 98206 or e-mail mrscribe@aol.com.