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How Background Checks Can Save Your Business From Financial Loss

Background checks are a crucial part of today’s society. It has become common practice for employers and organizations to run background checks on potential employees, volunteers, and vendors or contractors. The importance of background checks has been heightened even more since the COVID-19 pandemic, as remote work and online transactions have increased. Background checks help prevent fraud and protect public safety by verifying identities, uncovering criminal records, and ensuring qualifications.

Identity Verification and Fraud Prevention

Fraud is a major issue in today’s society and can be costly for individuals, businesses, and organizations. According to the Federal Trade Commission, in 2020, there were over 4.7 million fraud reports, resulting in losses of over $3.3 billion. Background checks can help prevent fraud by verifying identities through social security number verification, address history, and credit checks. This process helps to ensure that the applicant is who they claim to be and has no history of fraudulent activity or financial problems.

Criminal Records

Background checks can also uncover criminal records, which is essential for public safety in certain industries. For example, a childcare center must ensure that all employees and volunteers who work with children have no prior criminal history. The same applies to healthcare facilities, where patient safety is paramount. Other industries where background checks are vital include transportation, education, and government jobs.

Ensuring Qualifications

Background checks can also verify educational and employment histories, ensuring that the applicant has the necessary qualifications to perform the job. This is especially important when hiring for positions that require specialized skills or certifications. For example, a hospital may require medical staff to have certain educational qualifications and certifications. If an applicant’s qualifications are not verified, it could put the public at risk.

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Real-life Examples

Background checks have become more essential than ever, with the rise of remote work and online transactions. In 2020, the COVID-19 pandemic forced many businesses to adopt remote work as a means of continuing operations while maintaining social distancing. However, this created new opportunities for fraudsters and scammers to exploit the situation.

One such case is the rise of unemployment fraud during the pandemic, where scammers were able to use stolen identities to file fraudulent unemployment claims. Several states reported a surge in fraudulent unemployment claims, with estimates of up to $36 billion in fraudulent claims being filed nationwide. By verifying identities through background checks, this type of fraud could have been prevented, saving taxpayers’ money.

Another example is the rise of online shopping during the pandemic. With the closure of many physical stores, more people turned to online shopping. However, this created new opportunities for fraudsters to exploit people’s personal and financial information. By conducting background checks on vendors and contractors, businesses can help prevent scams and protect their customers.

The Risks of Not Conducting Background Checks

The risks of not conducting background checks are significant. It could lead to hiring people who do not have the necessary qualifications for the job, putting the company or organization at risk. It could also put the public at risk if employees with a criminal history are hired for positions that require access to sensitive information or working with vulnerable populations, such as children, the elderly, or the disabled.

Moreover, the financial cost of not conducting background checks could be significant. Fraudulent activity could result in losses of money and damage to the company or organization’s reputation. Additionally, if an employee or volunteer causes harm to the public, the resulting litigation could be costly for the company or organization.

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In conclusion, background checks are critical in today’s society. They help prevent fraud and protect public safety by verifying identity, uncovering criminal records, and ensuring qualifications. With the rise of remote work and online transactions, background checks have become even more crucial. Failure to conduct these checks could lead to significant risks and financial costs. Companies and organizations must consider background checks to ensure they are making informed decisions that protect both their employees’ best interests and the public’s safety.

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