"The most obvious [red flag] is educational credentials not matching what the candidate says," advises Fred Clayton, president of the executive search firm Berkhemer Clayton and author of the handy brochure, A Guide to Assessing Executive Character. In an article on résumé fraud, Judy Olain, dean of Penn State's business school, referenced a 2001 study showing that nearly a quarter of job applicants misrepresented their qualifications. In recent years, a few notable examples include former Notre Dame football coach George O'Leary, who lost his job because the master's degree he said he had did not exist; the then-CEO of software giant Lotus, who exaggerated his education and military service; the past CFO of Veritas, who left over a phony Stanford MBA; and the CEO of Bausch & Lomb, who forfeited a bonus of more than $1 million because he claimed a fictional MBA.

Clayton also suggests checking for timeline gaps. "Résumés are presented as an accurate, chronological record of a career," he says. "If they leave an employer off, it [might be that] they worked there and that they were asked to leave."

The subtlest form of résumé fraud is simple embellishment, which is harder to spot. "An executive says he or she had direct responsibility for certain functional areas and that he or she achieved certain things, but when you talk to someone inside the company you find out that they didn't really."

Taking the time for due background diligence is the best way to avoid problems later, says Michael Hofman, an editor at Inc. Magazine. "I think we all believe that most people probably embellish," says Hofman. "In terms of flat-out lying, I have to imagine that out of 10 or 15 candidates, some do, which is why having someone actually call everyone and make sure that the person worked there is a simple step every potential employer can take to protect themselves."