Spot the Red Flag

Read the scenario. Identify the compliance red flags. How sharp are your instincts?

Day 21 Vendor Risk Easy

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Educational Tool Only. This tool is provided for educational and informational purposes and does not constitute legal, regulatory, or professional advice. Results should not be used as the sole basis for any compliance or business decision.

No Guarantee of Accuracy. While this tool is based on recognised regulatory frameworks, LexFlag does not guarantee the accuracy, completeness, or currency of the results. Regulations change frequently and may vary by jurisdiction.

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The Scenario

Your HR department has been using QuickStaff Solutions to fill temporary IT positions for two years. A routine vendor review reveals that QuickStaff charges your company $95/hour per contractor but pays the contractors only $28/hour — a 70% markup far exceeding the industry standard of 25-40%. Background check records show that QuickStaff certified five contractors as having passed criminal record checks, but when your team independently verified, two had serious undisclosed convictions. QuickStaff's business address is a UPS Store mailbox, and the company has no employment practices liability insurance. Your IT director's brother-in-law is listed as QuickStaff's sales director.

Which of these are red flags?

Select all that you think are compliance red flags, then submit.

70% markup far exceeding industry standard

An excessive markup suggests the company may have been selected through improper channels rather than competitive evaluation.

The company has been used for two years

Duration of the relationship is not a red flag. Many vendor problems only surface during formal reviews.

Falsified background check results for two contractors

Providing false background checks exposes your company to security, safety, and legal risks and demonstrates vendor dishonesty.

No employment practices liability insurance

A staffing agency without EPLI insurance transfers significant legal liability to your company for any worker-related claims.

IT director's brother-in-law is the vendor's sales director

An undisclosed family relationship between a key decision-maker and the vendor represents a serious conflict of interest.

Contractors are filling IT positions

Using temporary IT contractors is a standard business practice across industries.

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