Key insights:
- Rising Candidate Fraud Trends: Discover the latest industry data on identity fraud in contingent workforce programs and why large buyers are uniquely targeted.
- Common Types of Worker Identity Fraud: Explore real-world examples of schemes, including borrowed identities, AI-enhanced resumes, and remote work cover stories.
- How MSPs Prevent Contingent Workforce Fraud: Learn actionable risk management strategies—from live-video I-9 verifications to consolidated payroll cross-checks—that block fraud before day one.
- 5 Questions to Audit Your MSP’s Identity Protocols: Use this quick 5-question governance checklist to evaluate whether your current MSP protocols leave you exposed.
People always ask me what keeps a staffing CEO up at night. Lawsuits? No, those are the cost of doing business. We’re numb to them by now. Payroll? Compliance? Also no.
It’s thirty people paid with Walmart cash cards.
That’s not a joke, or at least it wasn’t when we found it. Our team caught a pattern in one program’s candidate pool: about 30 people, all cleared through standard employment verification, I-9 included, all set up to be paid via the exact same type of retail cash card. So we looked closer and found they all had the same zip code. It was an entire “workforce” clustered in one neighborhood, which is already a little too tidy for comfort.
When we pulled the addresses on their applications and ran them through Zillow, every single one was a house for sale. Not lived-in or rented, but for sale. Empty, staged, and probably with a bowl of decorative lemons on the counter while 30 “employees” claimed to reside there.
Here’s the part that should scare every enterprise reading this: none of these people had failed standard background checks. They cleared the paperwork, and that’s the whole problem.
And that’s just one story of many. That same month alone, our team flagged 11 different types of identity fraud.
Rising candidate fraud trends in contingent labor
For years this felt like a SearchPros problem, something we quietly handled and didn’t talk about because who wants to admit fraud is walking through their pipeline. Turns out everyone has this problem. SIA’s 2026 Workforce Solutions Buyer Survey just put numbers on it, and the numbers are not subtle:
- 54% of companies reported experiencing identity-related fraud in their contingent workforce program — up from 37% just one year ago
- 44% encountered fraud during the engagement process — meaning after the person was already working, not caught at the door
- Over a third found deception in submitted credentials or history
- 82% of large buyers reported candidate fraud, versus 65% of smaller buyers — not because small buyers have fewer fraudsters, but because large buyers have better tech actually looking for them (93% vs. 74%)
Read that middle number: 44% of fraud is found after the person is already engaged. This is a “we stopped looking once the box got checked” failure, and it’s the exact gap our process is built to close.
3 Common types of worker identify fraud
Everyone pictures identity fraud as one guy with a fake ID. That’s the least of it. Of the 11 distinct types we saw in one recent month, the pattern behind most of them was the same: the person on payroll is not the person doing the work, or they don’t exist at all.
A few real ones:
- Borrowed identity. A bad actor clears I-9 and verification clean because they’re using a real person’s information to get the job. The paperwork is airtight, but they’re using a stolen identity.
- AI-written qualifications. A candidate lies on the resume, then uses AI to generate a resume and cover letter engineered to match the job description word for word, so the lie reads as a perfect fit instead of an obvious one.
- Remote work as the cover story. Remote candidate fraud is the biggest category we see, by far. Remote used to mean flexible. Now it sometimes means nobody can verify where — or who — is actually logging in. We’ve found people working the job from entirely outside the country while the timesheet says otherwise.
The common thread: distance. Distance between the interview and the desk, between the resume and the person, between where they say they are and where the login actually happens. Fraud loves distance. Our job is to remove it.
How MSPs prevent contingent workforce fraud
I don’t believe in more paperwork. Modern MSP risk management relies on fewer, better checkpoints that close the distance. At SearchPros, that means:
- In-person, live-video I-9 identify verification – not a document upload, an actual live human confirming an actual live human.
- Company assets shipped only to the address on the government ID — no “please send my laptop to a different address,” because that’s exactly the gap where remote fraud resides.
- One identity-verification standard applied the same way to every supplier — no exceptions because someone “already knows the client.”
- Payroll, onboarding, and access data reviewed together, not siloed into three different teams’ inboxes, so we can see patterns.
- A clear, named owner for escalation the moment something doesn’t look right — because “we all kind of noticed” is how 30 people almost got issued badges.
Our recruiters are trained to notice the behavioral stuff. Our onboarding team cross-checks the paperwork stuff. Our payroll team flags the pattern stuff. Alone, none of those are enough. Together, they caught 30 people before a single paycheck was issued, and eleven other schemes before they touched client systems.
5 questions to audit your MSP’s identify protocols
If you run a contingent workforce program, ask your MSP these questions and watch how fast they answer:
- Do all our suppliers follow the same minimum identity standard, or does each one grade their own homework?
- Is identity checked again – live, in person, or via video — after the interview and before day one?
- Where do our remote workers’ assets ship? Does anyone check that against the ID on file?
- Are payroll, onboarding, and access data reviewed together for patterns, or read separately and forgotten?
- Who owns the decision when fraud is suspected?
If the answer to any of those is a shrug, you have a governance problem.
The bottom line
Identity fraud isn’t a background-check line item anymore; it’s the top-ranked risk contingent workforce buyers reported this year, and it’s growing fast enough that “we haven’t seen it” is no longer reassuring, it’s just a sign nobody’s looked yet. The programs that catch it aren’t the ones with the most paperwork. They’re the ones who actually looked up the address on Zillow, and the ones who ship the laptop where the ID says, not where the email asks.
We did both. Thirty applications, one very odd real estate listing, eleven schemes caught in a single month, and zero paychecks issued to people who didn’t exist where they said they lived.
Is your contingent workforce program exposed to identity fraud?
Fraud is everywhere, and you need a plan to identify it before bad actors infiltrate your organization. SearchPros is here to help you top contingent workforce identity fraud before it hits payroll. Contact us today to learn how we can protect you.
