How do recruiters verify that the candidate truly has competing offers?

Honesty because it is taught in kindergarten to every individual and a min trust is needed. What if he is planning to secretly rob you when you get your signing bonus? Get the gist.

From employer perspective the competing offer is actually irrelevant. They are willing to negotiate if they gauge your value to be higher than your asking price and it's not likely you will accept the current offer. It's really that simple.

Not worth the risk

Seriously? Imagine the privacy implications if there were a system that companies use to share offer info? And of course the strategic implications of sharing that offer. Oh wait, it’s a Facebook person who asked the question...

Recruiters tend to move around fairly frequently. Even in a market as large as NYC most of them know each other. Probably not worth lying.

Questions of personal integrity aside, recruiters probably have a pretty good idea of what other companies are willing to pay for what and also: they network. Don't turn into your recruiter's next coffee break joke.

Wiretap the recruiters and sue them for privacy infringement

I wonder as well. I received multiple offers recently (posted about it on Blind) and the recruiters took my word for it without questions.

Recruiter here. I wouldn’t advise it. If you lie about a competing offer: 1. We as well as our comp team have data from every candidate about their offers from other companies. If your number is fabricated, we’ll know. Let’s say you make up a competing offer from Facebook and tell your recruiter you’re getting $150k, 20% bonus and $120k in equity and that you’re a level 5. Well, level 5 makes more base than that, a standard bonus for level 5 is actually 15% not 20% and equity is much higher too. You run the risk of us asking you to show us the offer. I had a candidate who gave me her numbers from XX and I ran it by my manager to get approval and he shut it down. He used to work at XX for years and said the candidate was not giving me accurate numbers. I had to go back to the candidate for the docs and she admitted she “rounded up”. We could have rescinded the offer right there. 2. Recruiters are very well connected people- it’s our job. I had a candidate that was giving me really weird numbers for (popular tech company) and saying “I don’t know” and “it was a verbal offer”. I used to work at (popular tech company) for years so i picked up the phone, called my recruiter friend there to see if she had any insights. Granted, I only did that once in my 10 year career as a recruiter and it was only cause the candidate was being so weird about it and his numbers were way off and title was inflated but the bonus percentage he told me says he was only a level 5, but the title he told me was Staff Engineer. It didn’t sit right with me so I pulled the one lifeline I never had to use before. You don’t want to burn bridges with recruiters. We remember most of the bad seeds and recruiters move around a lot so let’s say you lied to a re recruiter who works at a less known company and then years later the re recruiter goes o your dream company recruiting for your type of role; you’d want the recruiter on your side to help you get in. Honesty is the best policy. Of course you could risk and get away with it but if you get caught, it’ll be on your record permanently and that company wouldn’t want to hire a liar in the future.

Nothing is “on your record” permanently unless it’s your record with the law! Competing offers, no competing offer: why should it matter? The company should decide if they want to hire you, and at what rate, based on THEIR assessment of you. If they are basing it on a “competing offer” they’re not very good at selecting candidates. Typically employers have much more power in the negotiation process so candidates are naturally going to use whatever tricks they can to get leverage.