Study by background check platform finds AI hiring fraud costs companies $50K+ annually

A new study by Checkr, a background check platform, reveals that AI-powered fraud is rapidly outpacing employers’ ability to detect deceptive hiring practices, with candidates increasingly using artificial intelligence to fake identities, qualifications, and even interviews. The research shows that nearly two-thirds of managers believe job seekers are now better at AI-enabled deception than companies are at spotting it, creating significant financial risks for organizations.

The scope of the problem: Only 19% of surveyed managers expressed confidence that their hiring processes could catch fraudulent applicants, highlighting a dangerous detection gap.

• 59% of managers suspected candidates of using AI to misrepresent themselves during the application process.
• 31% reported interviewing someone who was later revealed to be using a false identity.
• More than one-third said a completely different person appeared in place of the original candidate during interviews.

Financial impact: The costs of fraudulent hires are substantial, with many companies reporting significant losses from deceptive candidates.

• 60% of managers caught applicants misrepresenting their experience or qualifications.
• Nearly one in four managers estimated their companies lost more than $50,000 in the past year due to fraudulent hires.
• One in ten reported losses exceeding $100,000 from hiring fraud.

How employers are adapting: Despite the challenges, many organizations are beginning to strengthen their defenses against AI-driven hiring fraud.

• Almost two-thirds of respondents said their organizations updated hiring protocols in the past year to address identity and AI-driven fraud.
• More than 60% reported that HR teams received specialized training to identify red flags during recruitment.
• Companies are moving toward multi-layered protection strategies rather than relying on single safeguards.

Defense strategies: Employers are implementing various approaches to combat sophisticated fraud techniques, though balancing recruitment speed with thorough verification remains challenging.

• 36% favor in-person verification as their primary defense mechanism.
• 31% are turning to AI fraud detection software to fight fire with fire.
• 24% are opting for stronger background check procedures.