IME, the employee provides a home address and commute route to the company's payroll dept. The folks in HR check this route with google or navitime to make sure it's a sensible route from the employee's home. And they verify the monthly commuter pass fee. And then the employee gets the money added to the monthly salary payment. No further questions asked.

There's money to be made. Perhaps it's not a fortune, but for an underpaid new recruit, it could make a significant difference over the course of a year.

Now ... that's based on my experience at three relatively small firms. Maybe other firms have more stringent checks to catch fraudsters.