Do we need to do a dirt check on those closest to us?

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Over the course of the holiday season, many of us have invited people we don't necessarily know that well into our homes, but should we be more careful about who we trust?

According to background checking website there is good reason to be paranoid. As cases of identity fraud grow the world over, the founders of the site - who claim to conduct 250,000 searches a month - argue that you can never be too careful about making sure the people around you are legitimate.

"How well do you know your sister's new boyfriend, the person you met on an online dating site or even your new housekeeper or babysitter?" site founder Erik Knight said.

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Dallas-based 48-year old psychotherapist Christina Steinorth-Powell told CNBC that she has used background checking websites to screen potential dates.

"After I divorced and re-entered the dating pool, I background checked men who interested me before dating them," said Christina. "With all the stories of women falling victim to men who were still married or lead some other type of double life, I hoped to try to avoid that type of situation," she added.

Another user of the site, Chris Martin, based in Arizona, told CNBC he used background checks to investigate business associates.

"Most of my background checks are for people I am going to do business with. Before I invest too much of my time or money into things I like to know if the person I am dealing with is actually on the up and up," said Martin.

Martin said on one occasion he researched a potential contact who he was concerned appeared "shady."

"Once I found out he was being sued by previous business partners and had been arrested several times, I backed out of the deal," he added.

The approach may seem overly paranoid to some, but as cases of identity fraud surge worldwide, argues it pays to be more vigilant. Background checking websites offer a platform to collate online information from public records, offering insight into personal information from criminal records to business transactions.

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Discovering Madoff's fraud

According to, 15 million U.S. citizens had their identities stolen last year, clocking up $50 billion in losses. And the problem is fast growing outside of the U.S. as well.

In the U.K., for example, one in four citizens have been a victim of identity fraud, according to independent market research specialists Dynamic Markets, while in Australia, from 2010 to 2011 the Annual Bureau of Statistics found that 1.2 million, or 16 percent of the population of people over the age of 15, had experienced at least one incident of identity fraud in the past year prior to interview.

Knight says his site enables individuals to better protect themselves against fraud, by knowing people around you are legitimate, it can reduce the possibility of making your credit cards and personal information open to fraudsters.

This is because fraudsters can steal an identity by obtaining different pieces of information about a person and putting them together like a jigsaw puzzle, including information such as a person's post-code, maiden name or date of birth for example. The rise of the internet and social networking are making it easier to put these pieces of information together.

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"It's important in this day and age to know who is surrounding you, as these people have physical access to your things," said Knight.

"They've got physical access to your property and credit cards, and they can get virtual access to all your identity pieces - these are two dangerous things. Security works as long as you keep those things completely separate in your life, but if you combine them, it puts you at risk and especially with new people coming in and out of your life frequently, I think it's a good idea to know who you're dealing with," he added.

Interestingly, Knight told CNBC around 10 percent of his business comes from Asian companies wanting to check out potential business partners and new hires from the U.S. and Canada, and is growing at a rapid pace.

According to Raj Samanj, chief technical officer of EMEA at internet security firm McAfee, individuals should be careful about using choosing which background checking sites they use, if they do choose to use them.

"There are many companies out there that promise to do a search against publicly available information, however there are considerably more companies out there offering to extract data that is not so accessible," he said.

"It can and is often very tempting to get a formal background check on people you interact with, but there could be legal repercussions regarding data protection legislation if investigators use less than appropriate methods," he added.

Another negative implication from background checking websites is that they can also be used as tools by identity fraudsters themselves as tools to enable their fraudulent practices, said Samanj.

"Any data, no matter how insignificant it may seem, could be used to conduct an attack. Generally there are two types of data sought, there is enabling data (those that enable me to get enough information to conduct an attack) and primary information (the data I am after)," said Samanj.

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DirtSearch's Knight recognizes this problem, and said it he also recommends clients do a 'dirt check' on themselves in order to be fully aware of what information about you is publicly available.

"It is important to know what information about you exists on the web and to ensure it is accurate. Maybe you have the same name as someone with a sketchy past or maybe someone has stolen your identity without you realizing it. Search yourself often to know what information is assessable about you," he told CNBC.

—By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie