The last time you hired somebody who wasn’t the right fit for your company, it was not because they lied on the resume, but because there was no oversight during the screening and interview process.
Fraudulent hires are rarely discovered during resume screening. They're caught three months down the line, when a client gives feedback, a performance review brings up a red flag, or the team quietly asks why this person keeps getting stuck on tasks they claimed to have done before. By then, the damage is done and already compounding.
One must take into consideration the cost involved when the candidate who passed your test did not possess the necessary skill set that was being tested for. This is a whole new ball game. This blog post is targeted towards HR managers who have to justify the budget requirements for proctoring to their CFOs.
What Does a Bad Hire Actually Cost?
The U.S. Department of Labor says that almost 30% of one year's salary goes towards covering the cost of a poor hiring decision. This would be the cost of recruitment efforts, onboarding time, training costs, and the loss in productivity that becomes clear when you try to replace someone. In other words, for a job worth $60,000, that is $18,000, and that is not in severance packages but in all of the above cases.
CareerBuilder's survey of 2,500 hiring managers found that 74% of employers had been affected by a bad hire. 41% said that a single bad hire cost them more than $25,000. For one in four, the damage cleared $50,000. One hire.
That's the baseline. And it assumes your bad hire at least had the qualifications they said they had.
A more risky situation occurs when you have an applicant who has a good résumé, does well on the interview, and successfully passes your screening process because someone else answered the technical questions.
Also Read: What Is AI Proctoring? How It Works, What It Detects, and How to Use It for Hiring
How Interview Fraud Is Happening Right Now
Remote hiring has only been getting more popular due to a variety of benefits and conveniences that it brings to hiring in general. In June 2022, the FBI issued a formal public service announcement warning employers about impostors who are using deepfakes and stolen identities to masquerade as others during job interviews, especially for remote technical roles.
In any case, the techniques have become more systematized and more common. “Ghost coding” services – which involved candidates paying people to perform live technical assessments on their behalf – got to be prominent enough that both the Wall Street Journal and Bloomberg covered the trend in 2023. The candidate remains in front of the camera, with a second individual solving the challenge behind the scenes and relaying the answers via a second device. Some charge for remote technical interviews, some charge per session.
Then comes the infusion of AI tech in this whole scheme. There are now several ways candidates cheat using AI, and real-time cheating devices mean a single candidate can attempt screening calibrated to filter out people who can't perform at that level.
It is evident from the HireRight annual reports regarding the Employment Screening Benchmarking that resume fraud, credential discrepancy, and misrepresentation by the candidates are some of the major concerns for businesses.
The difference between “we verified the résumé” and “we verified the person in the interview” is what constitutes remote interview fraud.
Which Industries Are Getting Hit Hardest
Coding interviews are structured, predictable, and have now become easy targets for proctoring proxies. A candidate usually handles the face-to-face portion while a second person solves the technical problem elsewhere and passes answers through.
However, in finance and healthcare, credentialing takes center stage as the issue at hand. In finance, an incorrect credential exposes you to risk from a regulatory standpoint, not one that involves poor performance.
Compliance risk related to individual credentials is one that is very tangible, verifiable, and costly to address. In healthcare, a false credential exposes you to clinical risk, not just for yourself but for others as well.
Even mid-market roles in operations and project management face this. Any position with a structured screening round has a point where interview cheating can happen.
The difference with non-technical roles is that the skills gap often takes longer to be discovered, which tends to make the total damage higher, not lower.
What Does Each Fraudulent Hire Cost? : The Math Nobody Runs
Most HR teams track only cost per hire. Very few actually track the cost per fraudulent hire, because the fraudulent nature usually isn't confirmed until months have already elapsed.
Here's a conservative estimate for a mid-level engineering hire at a $90,000 annual salary:
