How Biometric Authentication Safeguards Global Payroll Systems

Payroll fraud can occur when an organization’s payroll system is compromised from either internal or external threats — and funds are stolen. Internal fraud can range from unauthorized bonuses to fraudulent expense reimbursement, while external threats can come from cybercriminals breaching a system to steal personal data and tampering with payroll.

New scams emerge as technology evolves, so fraud persists. Only innovation can counter innovation, and biometric authentication is one of the most promising solutions to stop fraudsters from tampering with payroll systems.

How Biometric Authentication Combats Payroll Fraud

Biometric technology is not completely foolproof, but it can meaningfully prevent payroll fraud in several ways.

Busting Ghost Employees

Biometric data is a reliable verifier of a person’s identity. Ghost employee fraud is harder to pull off when payroll accounts link to people’s unique physical and behavioral characteristics, such as fingerprints, facial geometry, voices, veins, irises, signatures, keystrokes and hand gesture-based touchscreen control.

Larger organizations, whose employee and independent contractor counts fluctuate regularly, can benefit from biometric authentication. The process reduces the pressure to conduct internal audits to catch active records of former and nonexistent staff.

Ending Buddy Punching

Biometric technology can preserve the integrity of timesheets. Authenticating workforce management software users through biomarkers forces employees to be physically present at check-in and checkout.

This process makes it tricky for fraudsters to clock in early and clock out late without working. It helps ensure the hours logged by team members are accurate and that they receive earnings accordingly.

Denying Pretenders Access

Incorporating biometrics into the payroll platform’s multi-factor authentication renders credential-based fraudulent schemes ineffective.

Many hackers who steal employees’ login details commit fraud through payroll diversion and tax return scams. Their chances of success can drastically decrease when they must provide specific biometric data on top of usernames and passwords.

Challenges and Considerations

Collecting and storing biometric data can raise privacy concerns among employees and requires regulatory compliance. Unlike other types of personal data, biometrics are virtually unchangeable, making their owners lifelong targets of identity theft if stolen.

Payroll system users with global talent must abide by relevant international and local laws. The California Consumer Privacy Act and the European Union’s General Data Protection Regulation are the most stringent.

Understanding the nuances of various data privacy and security laws is challenging. However, as a general rule to respect data subject rights, compliance entails informed consent, transparency, access and correction, cybersecurity and the right to withdraw.

Best Practices in Biometric Payroll Implementation

Execution is just as important as adoption. Consider these best practices to maximize biometric authentication’s potential to combat payroll fraud.

Use a Vendor With Sophisticated Tech

Biometric solution sophistication matters. The most capable ones incorporate data encryption every step of the way to detect attacks and adopt zero-trust security.

Weaker biometric payroll technologies create a false sense of security. They’re vulnerable to deepfakes, spoofed facial recognition models and other advanced AI-powered attacks.

Reliable tech vendors outsmart cybercrime gangs experimenting with ingenious methods to bypass biometric checks with legitimate personal data from large-scale farming operations on the dark web.

Train Users Properly

Employee training is vital for the success of biometric authentication implementation. Educating staff on the financial impact of payroll fraud on the company and everyone’s daily workflows can help minimize resistance and encourage adherence.

The training should cover what constitutes payroll fraud and its penalties. When fraud is executed internally, it is typically committed by someone from accounting or administrative support through ghost employees, timesheet fraud, buddy punch-ins and more fraudulent techniques. Everyone must know which payroll-related activities the company considers fraudulent. 

Here are biometric authentication training suggestions: 

• Conduct training in phases — introduction, hands-on practice and feedback.
• Flesh out the solution’s features and discuss how it works in plain language, ensuring that trainees with different technical levels and roles are on the same page.
• Provide users with adequate time to test the biometric solution. Let them assess their comfort level and note potential areas for improvement.
• Arrange a Q&A to allow users to ask questions, raise concerns and recommend improvements.

Prioritize Timely Updates

Regular updates are necessary to ensure biometric payroll solutions run smoothly and stay bug-free. Schedule updates to automate the process and fix vulnerabilities as soon as possible. Notify users about upcoming updates and the length of corresponding downtime.

Create a Well-Thought-Out Fraud Reporting Policy

Make it painless for everyone to report potential payroll fraud attempts to help catch perpetrators early and highlight system weaknesses. Fraudsters are less likely to circumvent biometric checks when more eyeballs are watching.

Clearly define the steps to reduce confusion. Use anonymous reporting channels to embolden witnesses and those privy to fraudulent schemes to alert management.

Rotate Payroll Responsibilities

While biometric authentication promotes accountability, people with direct access to payroll data can abuse their position to commit fraud. Decentralize this privilege by ensuring this power rotates randomly between trusted users, reducing the risk of collusion.

Biometric Authentication — Fraudproofing Global Payroll Systems

Biometrics has limitations and downsides, but it’s one of the most effective technologies to combat payroll fraud. Learn how to properly adopt biometrics to get the most out of the technology and prevent fraud in your organization.