MAKING SENSE -- March 12, 2013 at 11:59 AM ET
Premium Job Board Sued for Promising Customers Jobs That Don't Exist
If you are a job seeker looking on massive online job boards for opportunities, beware. You may fall victim to a scam like the alleged scam by premium job board TheLadders, a website that is now the subject of a consumer protection class action lawsuit. Image by Imagezoo/Getty Images.
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Is the "jobs crisis" so bad that scammers are taking advantage of desperate job hunters? Most job hunters would laugh at the thought that everyone doesn't already know it.
A consumer protection class action filed Monday against a job board, TheLadders, in U.S. District Court (Southern District of New York), suggests that consumers are fed up with questionable online job-application practices by employers and job boards alike:
- Frustrated job hunters told us in a NewsHour Making Sense report that automated job application forms were a waste of their time.
- In the same report, Peter Cappelli, a Wharton School of Business researcher, reported that 26,000 engineers applied online for a routine engineering job -- and the software rejected every single application.
- When applicants make it into a job interview, they report that "rude employers" fail to follow-up with serious applicants even after promising to do so.
- One employer reported in 2011 that TheLadders overwhelmed her company with job applicants for positions that she never advertised with TheLadders. To make matters worse, TheLadders told applicants that the salaries were double what they actually were. "I'd love to charge them for the amount of my time they wasted," employer Claire Peat said in "TheLadders: How the Scam Works."
Could it be the recruiting systems that employers use to entice applicants have become a root cause of the unemployment (and under-employment) problem?
TheLadders has built itself up as a career-industry icon -- "a premium job site for only $100K+ jobs, and only $100K+ talent." But it's only part of the problem, because employers themselves fund job boards and tacitly encourage their behavior.
TheLadders case, filed by New York law firm Bursor & Fisher, alleges breach of contract and highlights what I believe is a trend toward selling access to commodity lists of jobs and resumes -- which are often inaccurate and out of date -- rather than actually matching real people with jobs. Employers and job hunters alike waste time with these corporate and job-board databases, and employers complain there's a "talent shortage" -- while over 14 million Americans are looking for jobs.
In the aforementioned Making Sense report, job hunter Sharon Moore said that after a required online job application form repeatedly "kicked her resume out," she gave up. Perhaps Moore's mistake was that she didn't bother to ask why the system was doing this.
But now job hunters seem to be wising up and taking action. A customer of TheLadders, listed as "Alishia" in the lawsuit, demanded to know why "only real, open $100K+ jobs" that she paid TheLadders for weren't real.
The lawsuit alleges that after applying for a "$100K+ job" through TheLadders, Alishia was told by the employer that the job only paid $50,000, and that it had never been listed with TheLadders. The lawsuit includes a customer service transcript in which Alishia was told by TheLadders' representative ("Andy") that "we don't have a direct way of knowing the pay range of each of these positions, we make an estimate."
The class action alleges:
"From its inception until September 2011, TheLadders scammed its customers into paying for its job board service by misrepresenting itself to be 'a premium job site for only $100k+ jobs, and only $100k+ talent'. In fact, TheLadders sold access to purported '$100k+' job listings that (1) did not exist, (2) did not pay $100k+, and/or (3) were not authorized to be posted on TheLadders by the employers."
The suit includes five counts including "violation of the Arkansas Deceptive and Unconscionable Trade Practices Act." A complete court-stamped copy of the class action complaint was obtained from the law firm that filed it and is available here: "TheLadders sued for multiple scams in U.S. District Court class action." (Although I am not a party to the case, the suit cites articles I've written about TheLadders, and refers to source material from TheLadders' customers and from employers and recruiters reported in my newsletter and blog. It also cites other sources.)
But TheLadders isn't the only job board whose utility is questionable. Last year, job hunters and employers pumped $1.1 billion into Monster.com. Monster claims over a million resumes and over a million jobs in its database. Yet since 2002, employers that were polled reported Monster.com was the "source of hires" no more than about 2-4 percent of the time.
CareerBuilder, another big job board, performs at about the same level. See "Just How Dumb Do You Think Customers Are?"
Job applicants interviewed for the Making Sense report questioned whether jobs they actually interviewed for really existed, because no one ever got back to them with an answer about getting hired.
The scam problem isn't uniquely American. In 2012, CBC Television in Toronto conducted a hidden camera "recruitment rip-off" investigation into a "career management" firm that charges sophisticated job hunters, including professional engineers, thousands of dollars for promises of "hidden jobs" that don't exist. Company executives were caught on camera making very specific promises that no one could possibly fulfill and then afterwards denying they promised customers anything. Who can "absolutely" promise you a job, other than an employer even if you're willing to pay for it?
Perhaps the smell of jobs scams will attract more lawyers, and perhaps more lawsuits will reveal what I think is a very broken employment system in America. With over 14 million people actively hunting for jobs, and 3.2 million vacant jobs begging, something smells pretty rotten.
Even allowing that some of those 14 million people are "unqualified" (Could all 14 million really be unqualified?), or "too old" (That's insane, while employers claim they value "institutional knowledge."), this means employers have a 4:1 advantage in today's employment market. With such an edge, they can't find the talent they need?
Why aren't more job hunters doing something about poor service from employers that interview them, lousy performance from job boards and other "career services," and possible job scams?
I think the problem isn't lack of talent. Remember that employers themselves are the primary "funders" of job boards like TheLadders, CareerBuilder, and Monster.com--they pay billions of dollars to post their jobs and to search the resume databases. Until employers start looking at their own questionable recruiting and hiring practices, it seems that "job application" software will keep making mistakes, and scammers will proliferate. Jobs will be left vacant. The economy will continue to flounder. Talented workers will be left on the street. After all, it's easier to blame workers and complain they have the wrong skills, than to suggest employers are blowing billions of dollars on... job board scams?
TheLadders suit also includes allegations of an "Expert Resume Critique Scam." For now, customers of TheLadders who want to know more about the lawsuit can obtain information from Bursor & Fisher.
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This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.