The illegal practice of “bait and switch” has captured some new victims: staffing firms and other employers.

The phrase typically refers to the unethical practice of luring customers with attractive offers and lowball prices, then trying to impose onerous terms or selling them less-desirable items. The Federal Trade Commission prosecutes businesses that scam individual consumers in this way.

Recently, staffing firms and other employers have become casualties of a different type of bait-and-switch scams whereby different people perform steps in the hiring process:

  • applying for employment with or placement by a staffing firm;
  • interviewing with the staffing firm or its client for a work assignment;
  • onboarding as an employee, contractor or candidate of the staffing firm; and
  • performing the customer’s work assignment or accepting the job.

Remote personnel interactions of all kinds — from recruitment through onboarding — are all the more common since the pandemic, making this scam easy to commit against employers, including staffing firms and their customers.

Potential fallout. Bait-and-switch operations are serious offenses that may involve several kinds of crime and fraud. And once companies have fallen victim to one, they are faced with a hornet’s nest of financial and legal issues — for example, which of the scammers, if any, are entitled to wages, benefits, workers’ compensation coverage and unemployment insurance benefits? How easily can a staffing firm recover income tax and FICA withholdings and matching amounts made for the wrong person? These scams also expose firms to customer relations issues, injury to reputation and contractual indemnity claims.

While most bait-and-switch scams target only the employment opportunities themselves, some are even more malicious, set on gaining physical access to valuable client information or assets.

Proper warnings. Staffing firms should cooperate with their customers and law enforcement to prevent, detect and respond to bait-and-switch scams. One helpful tool could be having applicants review and sign a document describing bait-and-switch scams which states their seriousness and illegality and warns applicants against participating in them. Such a document could constitute a formally signed agreement by the applicant to indemnify the staffing firm for the costs it or its customers might incur handling a scam in which the applicant participates.

[A sample of such a document is available on request from the author.]

Customers, too, should be informed of this risk, especially those that interview and select proposed temporary employees and hire permanent employees through staffing firms. Ideally, customers should be contractually required to confirm the identities of workers showing up to assignments or jobs. They should also be required to indemnify staffing firms for losses caused by their lack of diligence in bait-and-switch situations.

Identity verification. Staffing firms and customers should identify and close gaps of vulnerability in their recruiting and assignment processes. Photos are one tool for confirming personnel identities. Résumé and personnel file pictures have long been discouraged because, although using them is not generally illegal per se, they have raised questions about why employers would need pictures — other than to facilitate illegal discrimination. The answer to this question may be that pictures can confirm workers’ identities in all stages of assignments, helping prevent bait-and-switch scams.

Skill verification. Staffing firms do not usually see or evaluate the work of their assigned employees, so firms should urge customers to confirm assigned workers’ competence on assignments by focused supervision or other means.

This should happen before an unqualified bait-and-switch worker has time to do damage or underperform. Traditionally, guarantees have been offered for customer dissatisfaction with a contingent’s work, but that evaluation does not usually arise until the assignment has lasted a while. Instead, condition your guarantee on the customer’s discovery of insufficient qualifications within the first day or so.

Another possible tactic against these scams would be conducting candidate interviews with a video conferencing tool like Zoom or Teams, with all three parties (applicant, customer and staffing firm) present, the call being recorded (with permission of all parties), and required identification documents displayed during the call.

Although bait-and-switch scams are on the rise, constant vigilance can help protect staffing firms and their clients. By communicating frequently and working together to verify candidates’ identities and skills, staffing firms and buyers can reduce the risk of taking a scammer’s bait.