Fraud Reduction With Background Checks


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Fraud has always been a problem and not just for businesses or the justice system.  In fact, fraud plays a role in insurance rates, in credit card interest rates, in rental agreements and almost every other facet of life.  However, while fraud is certainly still a factor in everyday life, background check procedures have helped to reduce the incidence and frequency with which it occurs.  Any company, individual or government office wishing to reduce the chance they are struck by fraud should consider background check information and the benefits it offers.  What areas can benefit?  Here are just a few:

Rental Real Estate Management Companies and Landlords – Few areas have been hit harder by fraud and criminal behavior than the real estate industry.  However, while homeowners are more than capable of defrauding mortgage companies, the area most largely affected is the rental industry.  This includes landlord-managed rentals, as well as real estate management firms.

The problem in this industry stems from the fact that tenants can come and go with surprising frequency.  According to statistics, the average length of a rental agreement in the US is a single year.  Once that agreement ends, the renter moves on (in most cases) and the landlord or rental agency must find another renter.  The problem is finding qualified renters.  The property cannot be allowed to stand empty for long periods of time, as this increases overhead and operating costs.  Neither can landlords or management firms simply fill the property with the first available "warm body" to come along.

Finding qualified renters is a problematic situation, but a background check can be used to tremendous effect here.  A background check allows the landlord or rental company to investigate numerous facets of the renter's life and determine if they would be a good fit or not.  For instance, through a background check, landlords and rental agencies can investigate a potential renter's criminal history.  They can also investigate their credit history, their employment history and their education.  Each of these areas are key factors in reducing fraud and ensuring quality renters are found that will not destroy the property or reduce property values through their lifestyle or actions.

Businesses Searching for Investors – Background check procedures can also be used to benefit companies in need of investors.  The propensity for damage stemming from the wrong choice in investors is tremendous.  In fact, a single incorrect choice in this area can leave a company bankrupt, while the fraudulent investor escapes with the business' funding.  Embezzlement and outright direct theft of funds are not unheard of and are becoming increasingly common.  However, with a background check, businesses can begin the vetting process of any would-be investor.

Through a background check, a company can determine if any "investor" has ever been charged with fraud or similar charges.  Even petty crimes can be found through a criminal background check.  Of course, other factors can be examined, as well, such as the investor's credit history.  A credit history that shows irrevocable evidence of financial strain can indicate that an investor or shareholder constitutes a viable threat to the business. In this case, thanks to the background check, the company could avoid taking aboard this increased risk and reducing the chance of fraud.

Employers Hiring – Employers have long known that background check procedures are powerful tools and have instituted these checks.  However, most businesses are content to conduct a local background check.  While this might have been a viable solution in the past, today it is ill advised.  In an increasingly mobile society, it is becoming more and more common for people to make interstate moves.  Local background check procedures will do little good in the case of a potential employee from outside the state.
However, modern background check tools online can help employers vet each potential new hire, and provide them with access to out of state records, as well.  In fact, not using modern background check tools is a fast way to ensure the wrong employees are hired, considering emerging trends within the workforce.

Lending Companies – Lending companies are just as much at risk of fraud as anyone else is.  In fact, many lending companies are at an increased risk, due to the current state of the economy. Some in the nation are under the misapprehension that lenders have reduced risk because of advanced resources.  However, lenders have access to the same resources as any other business or entity.  However, a comprehensive background check on the part of the lender can quickly determine the risk inherent in a particular borrower.

Background check resources can provide lenders with powerful tools, whether that lender is a bank, a credit union, a payday loan lender or a hard money lender.  Through active background checks, lenders can investigate a person's criminal history for signs of theft, fraud and other criminal behavior, as well as investigating their credit history and their employment history.  This helps ensure that lenders make the best possible decision regarding their borrowers.

Obviously, a background check can provide tremendous benefits for a broad cross section of society.  Businesses, individuals and even government institutions like schools can benefit from conducting background check procedures. The threat of fraud can be virtually eliminated when these procedures are enacted, which results in greater profitability, but also in greater peace of mind and stability for all involved in the situation.