Legal fraud in recruitment: What you need to know

APSCo members are increasingly reporting sophisticated scams targeting recruitment businesses - in most cases, the recruitment firms have spotted the fraud in time, but it’s becoming more important to get prepared. As fraudulent activity grows in number and complexity, awareness is your first line of defence.

What scams are out there?

AI-powered recruitment fraud: A growing trend in 2026 is the use of artificial intelligence to make scams more convincing. Fraudulent activity has evolved to include cloning recruiter identities using publicly available data, deploying AI chatbots to engage candidates in real time, and generating highly realistic CVs, references and offer documents.

In some cases, AI is even being used to impersonate individuals in voice or video interviews, making traditional checks harder to rely on.

For recruiters, the risk goes beyond financial loss to include reputational damage and data exposure. As AI lowers the barrier for fraud, firms should strengthen identity verification for both clients and candidates.

Here’s an example of a few other scams APSCo’s legal team has come across, explained in detail in our guide here.

We also have our upcoming Legal and Compliance Forum on the 13^th May to help recruitment companies understand the impact of hiring fraud and how to manage it within your supply chain. Find out more and book here.

Umbrella company skimming: Some umbrella companies quote a headline charge but apply hidden fees on top. These are often buried within a single payslip total, making them nearly impossible to spot without a detailed audit.

Fraudsters posing as recruitment companies: Some scams will involve cloning legitimate recruitment brands on LinkedIn, WhatsApp, Telegram and other platforms - even referencing real staff - to direct candidates to apply for roles that don't exist.

Payrolling bogus contractors: Fraudulent activity can occur where someone poses as an employee of a well-known company – and contact recruitment firms with vacancies, often with a contractor already in mind. Once you're engaged, timesheets are submitted and paid. It's only when you chase the client invoice that you discover the client and contractor were never real.

What to look out for:

Some common red flags include:

• A new client contacts you out of the blue with an urgent requirement, often with a backstory about why their current suppliers can’t help - and promises of more work later.
• The role is typically contract-based rather than permanent.
• The client already has a contractor lined up and only needs you to handle payroll.
• They provide names and limited contact details (such as just an email) for preferred contractors.
• They ask to approve or see the job advert before it’s posted.
• They agree to unusually high pay rates for the contractor, especially early in the assignment.
  

It may be a single issue or a combination of factors that raise concern. However, legitimate clients can sometimes display these behaviours too, so it’s important to carry out thorough checks before raising any concerns with them.

Don’t miss APSCo’s Legal and Compliance Forum on Wednesday 13 May, where we’ll take a deep dive into hiring fraud - exploring the risks, the real-world impact, and what recruiters need to do next to stay protected.

Find out more and book your place for the forum here.

APSCo members can also find relevant resources and guidance here.