Why Vendor Due Diligence is Important for SMEs?

Organisations often merge with other entities in the quest of maximizing profits and for sustainability. When it comes to SMEs, partnerships and vendors are extremely crucial for business viability. With more organisations going the outsourcing and collaboration route, alliances are becoming a crucial ‘success factor.

A company should obtain a more detailed overview of the financials, reputation and business model of the future partner before collaboration. It is customary for an organisation to conduct legal, financial, tax, environmental or economic due diligence. Vendor due diligence is an indispensable step before collaborating with a partner company which is gaining prominence over the time.

Vendor due diligence is the due diligence carried out at the behest of, the seller, by independent third parties. Assigning the work of due diligence to a due diligence expert company can save a lot of valuable time and effort of an organisation with an unbiased report. Not only does it save time and money, it also uncovers areas, information on which would be otherwise difficult to obtain, thereby, ensuring better decision making using comprehensive research. Vendor Due Diligence, in all, is an essential risk mitigation practice.

Also read: How to mitigate risks with Vendor Due Diligence?

By carrying out an exhaustive set of checks like address, reference, criminal record enough vital information can be gathered about the opposite entity and the people associated with it, thus leading to a safe and risk mitigated decision.


Vendor due diligence is a ‘Good’ Investment

Due Diligence during the process of Vendor Onboarding is a long-term investment that has intangible benefits- it is a risk mitigation best practice. Below are a few arguments that build a convincing case for background verification:

1)   Vendor due diligence simplifies and accelerates the transaction process, and provides a better overview of the course of the transaction. It reassures vendors about financial and other related information. Moreover, it flags off any potential issues that may arise which could affect productivity and value of the asset about to be sold

2)   Vendor due diligence consults the seller with useful information for conducting negotiations with respect to the transaction in review. With due diligence, a vendor will be in a better position, with much better information of features and possible drawbacks. This brings enhanced control over negotiations for the vendor.

3)   Vendor due diligence ensures that the company to partner with is a legally compliant company. There are certain standards set by regulatory bodies which organisations are bound to adhere. By adopting the process of vendor due diligence, organisations can be assured that they are entering into a business relationship with a company which does not have any record of compliance breach. For instance, compliance to various regulatory bodies like US FCPA, UK Bribery Act, Indian Prevention of money laundering Act is necessary for every organisation to thrive in a global environment.

4) Due diligence of target company provides assurance on the authenticity of the claims made by the organisation. By ignoring the process of due diligence, there lies a possibility of tying up with a fake company.

5)   Over the course of a partnership, it may happen that any of the partners gets involved in unfair and unethical practices which impact the business venture/deal directly. To deal with such unforeseen possibilities, regular due diligence on the parties involved in the venture/deal should be one of the best practices to be incorporated. In all, Vendor Due Diligence has long term benefits and should not be overlooked!

Background Verification across the Globe: What’s New?

The majority of the companies have cited ‘risk management’ as the primary reason for undertaking background verification processes. With the evolving global landscape and changing paradigms in the business ecosystem (growth & scale), the way businesses hire and verify employees and partners is evolving.

Further, with the ever-volatile conditions of the market and increasing risk of litigation for negligent hiring, employers are paying attention to taking extra care in choosing their potential employees.

Read more – Putting the skates on the screening processes

Background Verification is increasingly becoming a board room-level discussion, and organisations are making investments to shield their brand reputation, company financials and employee safety with tech-enabled, new-age employee screening solutions.


Below are some of the top trends in background screening that are at the helm of background verification:

1.  Increased use of Social Networks for Hiring & Verification- The emphasis laid on utilizing social networks for candidate sourcing is fast gaining ground in the recruitment vertical. LinkedIn and GitHub are surfacing as useful forums for screening and profiling candidates for relevant vacancies. Not just Talent Acquisition and Employer Branding, Social networks and social media analytics are being increasingly used for background verification of candidates- their profile and reputation.

Social media can deliver insights about an individual’s nature and personality and can help in identifying gaps with the role’s requirement. This is also growing gradually, and an individual’s digital footprints are being mapped to be able to get a 360-degree view of an individual.

 2.   Technology Disruption It is no longer enough to deliver a fast and accurate background screening program. Companies are now looking for something more from background screening providers that can help HR managers in accurate talent acquisition. A surge in requirement of enhanced HR technologies to deliver a seamless candidate verification & on-boarding solution is disrupting this space.

Increased adoption of newer systems and applications will not only filter out the ‘bad hires’ but will also focus on augmenting quality of genuine hires, ensure smooth on-boarding and aid training, learning and development and employee engagement & communication. Artificial Intelligence, Machine Learning, Mobility and Analytics are being increasingly deployed to meet the needs of the changing market landscape

3. “Ban the Box” law- “Ban the Box” legislation is popular in several States in the US and it is expected that it will continue to gain momentum. It is an international campaign by civil rights groups and it basically advocates for ex-offenders. This concept is aimed at persuading employers to remove from their hiring applications the check box that asks if applicants have a criminal record. While employers must understand the legal ramifications of such practices as it is closely related to background screening, it nowhere means that employers cannot conduct a criminal background check of the candidate. Further developments on this will also impact background verification practices across other parts of the globe.

4.  FCRA The governing act for collection of credit information in the US, FCRA serves as a benchmark policy for background verification! Employers will be liable for any FCRA (Fair Credit Reporting Act) violations. It is important that employers consult their legal team in order to stay compliant towards FCRA regulations and all applicable state and local laws.

5. Screening gets Global Typically, US was at the forefront of background screening services; however, owing to differing legislative policies,liberalization and greater amount of awareness, background screening services are getting more importance than ever. With globalization and remote working environments, organizations need to verify team members across the globe, sitting out of a central office.

This calls for global background verification techniques. Background Verification players need to have a partner ecosystem, enabled with local domain knowledge and tech expertise to be able to deliver verification results with ease! Changing trends in business call for a change in approach to background verification. Are you consulting your vendor to help you stay on top of this wave of change?

Verify the “Master in Deceit” with Education Verification

A recent TOI article unveils the UP B.Ed. degree scam, with nearly 2000 primary teachers holding fake B.Ed. degrees. Around 30 colleges were found out to be involved in this fraud, supported by the senior staff. Mark sheets were held out to people who were not even enrolled. Many holding these fake mark sheets were also employed in govt. schools. The fraudulent incident came to light when Sunil Kumar, a student of Shiv Dhaam Singh College, Aligarh, affiliated to BR Ambedkar University, filed a petition in the Allahabad high court seeking action. Falsified information was provided to him by the university. He enrolled for the B.Ed. programme and received two different results. The erroneous mark sheet dethroned him off good job opportunities.


Diploma mills: The Seed of birth to Education verification

Diploma mills are spreading out like wildfire as an easy means to a decent job. These fake institutions issue fake certificates to students in lieu of money, creating gaps in an efficient education system & delivery. Fake degrees by fake institutions is only the tip of the iceberg. These fake degrees pad the resumes which are later utilized as work passes to potential jobs. Diploma mills pose a challenge for education certificate verification as well but conducting it can help to avoid such a sham act by fake universities/authorities. There’s a greater need for stiffer policies to verify fake degrees and fake institutions with education verification. Background verification companies deal with diploma mills every day and are experts on spotting the fakers.


Smart background checks essentially constitute criminal checks

Yes, employers could carry out smart background verifications, but the reality is that until consumer education catches up with the renown of diploma mills, such checks are irrelevant and usually incomplete. The task of checking educational credentials demands personal attention. Employers must make phone calls and crosscheck institution credentials with those of official sources such as the Department of Education and the FTC.

A better practice is to outsource the same to expert background verification companies who bring years of expertise and domain knowledge on board. This also adds to productivity. It’s time to uncover diploma mills and knock out fake degrees ruining careers and companies. With little in the way of oversight or standards, there is no way to discover whether an institution is legitimate or not. How secure are we if one of the employees gets promoted, thanks to her degrees from a diploma mill? When all the evidence is in, perhaps the best defense in the fight against the diploma mill scam is consumer education and awareness.

The power of the Internet has created an important avenue for higher education. It has also opened the door to potential fraud and scams. The first step is to screen the candidate to verify his/her academic credentials. If questions or concerns exist, dig deeper, ask questions, and do some research. Protect your organization from the potential exposure that may occur from hiring employees who lack the required educational and professional credentials for the job. A competitive job market implies deeper due diligence.

These fraudulent institutions specialize in duping employers and sometimes even their “students” into believing they offer legitimate education programs when really the only degree they should be handing out is a Master in Deceit. If you’re hiring for a rank with education criteria and you don’t want to take a chance when hiring your new employee, consider using a professional background screening company to conduct an education verification. Are you doing so?

How does Investment Due Diligence Help Your Investment Strategy?

When making a financial investment, whether it be in real estate or a company’s stocks, you need to know that it is a good investment. Investment due diligence is the process of investigating the potential investment risk and security before investing. Both, companies looking to acquire other companies and individuals who want to invest in businesses, should carry out investment due diligence. When done right, and by following certain guidelines, investment due diligence could vastly improve investment strategy. By weeding out the bad investments and retaining only the good ones, the chances for making a profit increases.

Also Read: Investment Due Diligence: An Investor’s guide to making rational ‘Investments’

Franchise Due Diligence: A Franchisee’s Checklist

If you want to become a business owner, but don’t want to invent a brand new business plan, then a franchise is a great option. Investing in a franchise allows you to be your own boss while already having a tried and tested business model at your disposal. Investing in a franchise, however, is not without its own set of risks. As with any investment, due diligence is required and Franchise due diligenceis no different. Franchise due diligence gives you the opportunity to analyse all the risks as well as the advantages associated with the brand.

Conducting an investigation on a franchisee brand that you want to invest in might require a bit of effort, but could save you a lot in the long run. Your final decision about whether or not you wish to invest in a particular franchise should be based on the results of franchisee due diligence.

10 Ways to Mitigate Risk with Employee Screening Services

Ever thought of hiring a parking lot personnel with a history of car thefts? How about consulting a doctor who does not have the required statutory licenses to perform a particularly risky surgery? There was a controversy some years back at Fortis Hospital where there was a death of a patient undergoing a double transplant by a surgeon allegedly not qualified to perform the surgery. Without proper Employee Background Verification, hiring and building alliances can prove to be fatal. Cases of Rape & murders by blue collar across schools, insider threats at workplace etc. are testimonials to lack of preventive measures. Such crimes can damage the reputation of the organisation. Businesses are subject to multiple risks when there is a lack of professional Employee Screening Services. Particularly when hiring for “positions of trust”, employee background verification is critical in employee risk mitigation. Risk mitigating background checks should include address and identity checks, qualification checks, credit checks, a seven-year criminal check, Aadhaar-based eKYC, previous employment records and social media checks.

10 ways Employee Screening Services mitigates employer risks

1. Ensures the right candidate in the organisation: With Aadhaar-based eKYC checks, the exact identity of the individual is validated. No fraudster can make inroads into an organisation with identity checks in place!

2. Ensures the right skills at the workplace: More than 50% of hiring managers encounter resume frauds, particularly with respect to skills and capabilities of candidates. Many candidates exaggerate their skills, while others claim to have non-existent capabilities. Employment verification verifies a candidate’s skills from previous employer along with associated details whereas Education verification verifies one’s education degree to ensure the necessary pedigree!

3. Prevents incidents of insider threats: Workplace violence, rape and other crimes can be mitigated when criminal background verification is done through Employee Screening Services. AuthBridge uses advanced APIs to screen through comprehensive database of all levels of courts and police records to ensure there is no risk of hiring a person with a prior criminal record.

4. Ensures the right attitude and motivation at work: The right person for the job will be more engaged and motivated, resulting in increased productivity. This can be ascertained through reference checks.

5. Ensures drug-free, safe and conducive workplace: Drug abuse testing mitigates the risk of hiring a person with a known history of substance abuse available from police or legal records.

6. Onboarding that turns new hires into lasting employees: Onboarding process can be made efficient with Employee Screening Services. The smoother experience of onboarding helps turn new hires into long-term employees. This is powered by eKYC.

7. Ensures the reputation of the organisation is maintained: Background screening helps avoid damage to the reputation of the brand by hiring the right candidates.

8. Ensures security of positions with significant trust: Sensitive positions are those that interact with key accounts. The integrity of these individuals can be ensured with appropriate employee screening services.

9. Reduces effort and time on manual checks: HR professionals earlier needed to devote huge amounts of time and manual verification through paperwork. This was labour and time intensive. New technology of employee screening services ensure zero downtime for Employee Background Verification. Repositories like WorkAttest and StudentServicesBureau make employment and education verification a matter of minutes respectively!

Also Read:How Data Repositories Can Facilitate Employment Verification Market?

10. Provides accurate, reliable and fast results: With no manual errors, duplicate entries, missing paperwork or unreliable reports, technology-enabled employee screening services ensures accuracy and reliability of results.


Partnering with Employee Screening Services Providers to mitigate risks

A reputable Employee Screening Services provider brings domain expertise and years of experience on board.  Not only do they help you mitigate risk, they also provide expert opinion to help you improve and implement a structured background verification program at your workplace.

How, What and Why of Background Verification-How Employees can Fool You

An increasing number of frauds committed by a company’s own employees have led to the need for more stringent background verification.


How employees have defrauded their companies

In June 2017, 53-year-old Susan Rue pleaded guilty to defrauding her former employers Procter and Gamble of $500,000. In her fourteen years with the company, Rue would often receive checks for official expenses which she would use to pay off her personal bills. Philadelphia-based Wells Fargo employee Hassante Denise East was arrested last year on charges of fraud and identity theft. East had repeatedly withdrawn money using fraudulent checks in fifty-four of the company’s bank accounts. Former J. P. Morgan and Chase employee Lawrence Obracanik wire transferred $5 million of company funds to his personal account fraudulently. Obracanik who had a gambling problem used the stolen funds to pay off his personal debt.


Background screening

With employees having access to a company’s bank accounts, cheque books, passwords and other sensitive information, background check are extremely important. Because of the growing number of frauds being inside jobs, the onus falls on the employer to ensure that they are hiring the right kind of person. Following a comprehensive checklist and knowing what to look for during a background check could save employers a lot of trouble, embarrassment and money in the long run.


Here are a few things you should look for before you hire someone:

1.    Criminal records: The first thing you need to be sure about is that the potential employee does not have a criminal record that has not been disclosed. A criminal record that has been kept under wraps should be handled with caution.

2.    Credit check: Credit checks of employees are especially important for banks and other financial institutions. If you are going to entrust an employee with large sums of clients’ money, you need to be sure that they have been able to manage their own cash well. Applicants with bad credit scores and who are constantly in debt don’t make good candidates.

3.    The authenticity of information on biodata: Verification of educational qualifications and past work experience is a must for two reasons- to make sure the applicant is being honest and that he or she does, in fact, have the required skills. False information on a CV is a big red flag that employers should not ignore. By taking these three points into consideration, employers can ensure that the people they are hiring are skilled, reliable and honest and forthcoming with their information. Anyone who falls short of these given criteria could prove to be a liability to the company.

Also read: 7 Ways of Preventing Fraud: Your Essential ‘Check’ List


API integration and expediting background checks

To manually do a background check on every applicant could be a long and tedious process. Manual checks could also overlook information that might have been important to the cause. A process to speed up background verification is required for the more efficient running of the company. Integrating an Application Performance Interface (API) for background verification could solve the problems that arise with manual checks. The API would serve to capture candidates’ information and their consent and automatically run a verification check.

The Automated system would immensely speed up the process and eliminate a lot of the human error. The interview and hiring process would be helped along more efficiently with the integration of an API into a company’s systems. A person who is not averse to falsifying claims on their CV cannot be trusted to maintain the integrity of a company. Undisclosed past criminal records, bad credit and false representation of qualifications can all be verified by doing a background check and help eliminate undeserving candidates.

7 Questions Related to ‘Criminal Records Check’

Criminal records check is part of the comprehensive background verification conducted prior to the hiring of a candidate. It reveals the criminal history, if any, of the candidate by checking various records available in the public domain. According to SHRM (Society for Human Resource Management), 69% of organizations conduct criminal records checks of candidates. About 52% of organizations said they conduct criminal records checks to ensure the prevention of negligent hiring. Surprisingly, criminal record check have revealed 75% failure rate of candidates in some parts of India. Let’s delve deeper to understand this better.


Criminal Records Check

Criminal records check involves litigation searches across court records for cases of civil or criminal cases. This is conducted using data released by courts in public domain. These include data provided by

•District Civil Courts & Tribunals

•High Courts

•Supreme Court

•Magistrate Court

•District Court

•State Courts

•Criminal Suit – Magistrate Court

•Criminal Suit District Court

•Criminal Suit State Court Criminal verification of candidates is done by using the online database links shared publicly by the District Court, State’s High Court, and also the Supreme Court of India.


Before you conduct Criminal Records Check, here are the 7 questions you should answer:

1.Why conduct criminal records check?

Extensive criminal records check becomes absolutely crucial to ensure a completely secure workplace- free from criminal intent. With criminal records check, one can rest assured of hiring individuals with a clean past. This also involves Litigate database searches. A litigation database check verifies if any proprietary or public database such as civil litigation database, criminal database, and/or regulatory compliance database features a candidate’s name. Both Indian and global databases can be checked to reveal any link the candidate might have to organized crime or have been mentioned in any litigation. When criminal records check is not carried out by a competent professional agency, such crimes can lead to the company’s reputation being damaged beyond repair. A study showed that in India, discrepancies related to criminal records and references were to the tune of 19.5% in 2016.

Also Read: How online criminal record checks are done in India


2. Who should we conduct Criminal Records Check on?

Criminal Records Check should be conducted on every incoming employee to ensure that no criminal can enter your workplace. A single element of discrepancy can impact your workplace safety, motivation, and brand reputation. Irrespective of the level of the hire, a criminal background check is mandatory!


3. Are there laws pertaining to criminal records check?

 A solely dedicated law pertaining to criminal records or background screening does not exist in India. But the Indian Contract Act, Indian Penal Code and Information Technology Acts of 2000 and 2005 are commonly taken as benchmarks for conducting criminal records check. Credit Information Companies (Regulation) Act, 2005 can penalize companies on failing to keep personal data collected on employees confidential.


4. What databases are available for criminal records check?

Apart from district magistrate, state and the Supreme Court’s public records, litigation-related information can also be obtained from National Crime Research Bureau and CBI’s Most Wanted Lists. Defaulters’ list can be obtained from databases of SEBI, RBI, Registrar of Companies and Central Vigilance Committee’s list of corrupt officials.


5. How to conduct a criminal records check?

It is important to consult a professional agency that has access to indexed criminal records and litigation databases. Before conducting criminal records check, it is important to disclose to the candidate that such a check will be carried out and obtain the latter’s written consent. We, at AuthBridge, have been helping employers conduct exhaustive criminal records check for years now!


6. Can an employee be suspended based on the criminal records check?

In India, a government employee will be suspended by default if he or she has spent 48 hours or more in police custody. The reason for such custody could be any crime, including dowry death charges. Private companies have their own disciplinary committees and policies. They can decide on a course of action after reviewing each individual case.


7. What should you do if you discover something negative?

Criminal records check is one of the basics of hiring the right candidates. The decision on hiring should be made after a detailed review of the background. It would be prudent to give the employee a chance to explain the negative finding before making a hiring decision.

Resume Verification is key to an Organisation’s Success

Yahoo’s ex CEO, Scott Thompson lied about his Computer Science degree which not only affected his hiring but also the official regulatory filings for the company. Dean of Admissions of MIT, Marilee Jones made up degrees from Union College and Albany Medical College, neither of which has any record of her attendance. Instances of misrepresenting information on a resume is very common. Resume verification is crucial to ensuring that the right candidate is hired and retained in the organization. Bad hires can lead to huge losses.

A study by CareerBuilder where 2,500 managers were interviewed found more than half of them had detected resume fraud. Resume frauds such as the exaggeration of skills, and falsification of experience are some reasons that necessitate resume verification. CV validation is also important to detect resume frauds such as claiming to have been employed by companies they never worked for.


Trends in resume frauds

Professional Resume verification agencies have a bank of data to deliver insights on resume fraud. AuthBridge, a leading background verification company, has compiled trends in resume fraud in India for 2017. According to this report, in 2017, 15.21% of candidates misrepresented information to employers which is a jump from 10.29% in 2016. The major areas where resume fraud were detected were in the areas of employment verification address verification, reference check and education. The maximum resume fraud that necessitated resume verification was faced by the Financial Services industry, at 24.99 %. This was followed by the Telecom industry.


Why is a resume check a must while hiring?

Bad hires can cost billions of dollars in revenue for companies annually. The rates of theft, malpractice, and other crimes can lead to a loss of productivity as well as the reputation of the organization. In the U.S., losses pertaining to embezzlement at the workplace lead to a loss of $4 billion annually. Close to 75% of workers stole repeatedly from the workplace according to the U.S. Department of Commerce figures. More than 30% of businesses, according to data, fail because of bad hires.

Resume verification is the only way to avoid detrimental consequences of bad hires. With Resume verification, one can ensure that what is stated in their resume and what information produced is consistent and true. Exaggerated claims are identified and corrective actions can be ensured. As per Society for Human Resource Management, a bad hire translates to costs as much as five times the salary of the wrong candidate. Particularly when hiring key executives, great caution with resume verification is critical. Partnering with professional resume verification services providers such as AuthBridge is an ideal solution to overcome resume fraud-related challenges.


What type of gaps exist in what is stated in resume and what is the reality

In India, 15.21% candidates faked resumes in 2017. The infographic below summarises the check level discrepancies in resumes. Employment records were the most manipulated.


Know who you hiring via different checks

Comprehensive resume verification such as the ones done by AuthBridge can include various checks such as employment verification, education verification, address verification, identity checks, criminal records and so on. Use of APIs, online databases and automation is driving efficiency in turnaround time and effectiveness of reporting. With real-time results, background checks can be conducted on the fly-anytime, anywhere. Trust can now be built in real-time, this is called TrustOnDemand.

Also Read– TrustOnDemand: The Game Changer for Hiring & On-Boarding

The new technological advances have helped HR professionals optimise resume verification processes to yield reliable and accurate results.

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