Navigating the Identity Verification Maze in Freelancer and Contractor Hiring

Bypassing identity verification in the hiring process for freelancers and contractors can have serious consequences. At the top of the list is the ever-looming threat of fraud. For instance, consider a business that hires a freelancer claiming to be an experienced graphic designer. If this person is an imposter, the company may find itself facing financial losses due to poor quality work, missed deadlines, or even legal troubles. Engaging an individual masquerading as someone else exposes businesses to potential financial setbacks and even legal entanglements. Moreover, if a hired freelancer or contractor, like a software developer or data analyst, lacks the requisite skills or credentials for the job, it could result in substandard output, tarnishing the company's hard-earned reputation.

Security concerns are another critical aspect. Freelancers and contractors often gain access to sensitive data or systems. For example, a company hires a contractor to manage its customer database, or a freelance developer to work on the company's proprietary software. In both cases, verifying their identity is crucial to ensure they pose no security risk. Failing to do so means potentially granting unrestricted access to classified information and systems to unverified individuals, a risk no company can afford to take. A single security breach can lead to significant financial losses, damaged reputation, and loss of customer trust.

Lastly, if a freelancer or contractor has a criminal record or negative history, it's crucial to know this before hiring them. Failure to verify their identity could lead to a dangerous situation for the business and their employees.

There are several common methods of identity verification that businesses can use. The first is to check the freelancer or contractor's government-issued identification, such as a passport or driver's license. This can be done in person or through a video call. Another method is to check the person's credit history, which can provide additional information about their identity and financial history.

Businesses can also use social media and online profiles to verify a person's identity. By checking their LinkedIn or other professional profiles, businesses can confirm their work history and education. Additionally, businesses can use background check companies to verify a person's identity and check for criminal records or other negative history.

To ensure accuracy and privacy, it's vital to follow best practices when conducting identity verification:

1. Obtain consent from the freelancer or contractor before proceeding with the verification process, either through a consent form or a verbal agreement.
2. Collect necessary information for verification and safeguard it from unauthorized access. Utilize secure methods for information transmission and storage, such as encrypted email and password-protected documents.
3. Confirm that your identity verification process is in compliance with relevant laws and regulations, including data privacy laws.

Some EU organizations, especially credit and financial institutions, are also subject to the 5th AML Directive — a law meant to reduce criminal economic activity. If this directive is applicable to a business, then a company is required to complete a check for each contractor. AML check identifies whether a person is a politically exposed person (PEP) or on any sanctions lists.

That might seem complicated but this verification is completed on automated platforms and usually it takes about 5 minutes to complete everything. Our recommendation is Sumsub, we use their solution since the start and we cannot speak highly enough of them.

Employing a third-party verification service offers several benefits:

• Ensures accuracy and reliability in the verification process, as these services specialize in identity verification and possess the requisite expertise and tools.
• Saves businesses time and resources. Identity verification can be time-consuming, particularly for remote workers or those based in other countries. Outsourcing this task allows businesses to concentrate on other aspects of their operations.
• Provides an extra layer of protection for businesses. Should any issues arise during the verification process, the third-party service assumes responsibility, sparing the business.

Identity verification is vital for businesses hiring freelancers and contractors. It safeguards against fraud and security risks while ensuring the hired individuals possess the necessary skills and qualifications. By adhering to best practices and employing the right tools and technologies, businesses can effectively verify potential hires' identities and avert the dangers of engaging unverified workers.
While Enty can't assist with contractor verification, we can facilitate agreements with contractors and streamline employee hiring. Simply answer a few questions, and your contract is ready. It's as simple as that!