Avoiding the Lemons: Six Warning Signs of a Bad Background Screening Check 7 Nov 2017

A Growing Need, With Growing Abuses, In a Fast Growing Industry

When it comes to the growing need for pre-employment background screening, the statistics are stark:

About 93% of employers conduct criminal background checks on at least some applicants, while 73% of employers conduct checks on all applicants, according to the Society for Human Resource Management. And there’s a lot to look for: nearly 1 in 4 adults (an estimated 65 million people) in the U.S. have a criminal record.

However, many additional people without a criminal record are wrongly tagged with one because of inaccurate background reporting, as well as deceptive practices by background screening firms charging low prices for low-quality results. This causes harm to both the applicant and, potentially, the employer.

There are no licensing requirements for criminal background reporting agencies. Anyone with a computer and access to records can start a business, and the total number of companies operating in this space today is unknown. Criminal background checking is a lucrative business, where the cost of ensuring accurate and complete information reduces profits.

Sloppy reporting was not a huge problem in the past when there were fewer companies gathering data and the only way to get it was to examine court records in person. Now that background screening has largely become a web-based industry, in a world where workplace security is a paramount concern, the number of screening companies has exploded. Not all of them provide reports that can be trusted.

A study by the National Consumer Law Center, an advocacy group, points to many problems within the industry. Many criminal background reports often list the same offense many times, making it appear as if the applicant has an extensive record. Worse still, report companies sometimes fail to do the basic checking necessary to distinguish among different people who have the same name.

NCLC’s research reveals that criminal background screening companies’ reports routinely:

• Mismatch people (i.e. a person with no criminal background with someone who has a record, which is especially problematic for people with common names);
• Provide misleading information, (i.e. a single charge listed multiple times), and/or
• Misclassify offenses (i.e. reporting a misdemeanor as a felony);
• Omit crucial information about a case, (i.e. a person is arrested but then found innocent);
• Reveal sealed or expunged information (i.e., a long-ago juvenile offense).

Many errors are due to common poor practices by background screening companies using corner-cutting measures such as:

• Retrieving information through annual bulk record disseminations, without routinely updating their databases;
• Failing to verify information obtained through subcontractors or even sub-subcontractors;
• Using unsophisticated matching criteria;
• Failing to use all available information to prevent a false positive match; and
• Lacking understanding about state-specific criminal justice procedures.

So how do you spot one of these Lemons before choosing a background screening company?

Warning Signs To Watch For When Shopping For a Background Screening Service

Warning Sign Number One: Too Little Information Required About the Applicant

Unlike State-based criminal record databases which typically use fingerprint checks, private criminal history background check companies typically match information in their databases using non-biometric information, such as name and date of birth. Moreover, due to privacy concerns, many courts will not release Social Security numbers. Therefore, many private background screening companies rely solely on first name, last name, and date of birth.

Warning Sign Number Two: “Instant” Criminal Background Checks Marketed to Employers

The NCLC report provides anecdotes on the real consequences of bad screening practices. On several occasions, Catherine Taylor of Arkansas had her housing and employment threatened because of mismatched background checks. At least two reporting agencies at different times reported erroneous records attached to a different Catherine Taylor with the same birth date, living in Illinois.

One of the background checks that reported on Ms. Taylor had access to other identifying information which would have distinguished these two women; however, the particular product chosen in this case by the employer was designed to give an instant result, and thus was not designed to access that information. The company continues to use the Instant Report product, acknowledging that more false positives are possible.

Employers can be sued if they rely on false information in a shoddy background report, and don’t comply with the notice and corrective practices required by the FCRA. Any company that advertises “instant background reports” for pre-employment or housing screening purposes is one that could land you in hot water down the road. (See “The Worse News,” below.)

Warning Sign Number Three: Does It Define Itself As A “Public Records Disseminator” or a Background Screening Agency?

The FCRA (Fair Credit Reporting Act) requires full notice, consent, and the opportunity to correct a false record before a decision is made on an applicant for credit, housing, or a job.

Another firm that returned a false positive on Ms. Taylor calls itself a “public records disseminator.” It is a web-based background screening company in which the user can enter either a subject’s full name or date of birth to compile matching criminal history records. The company acknowledges that it uses criminal databases purchased from government agencies, which should make them a consumer reporting
agency under the Fair Credit Reporting Act, but it explicitly denies it is a “consumer reporting agency” and continues with the same practices under the label of “Public Records Disseminator.” But you won’t see this unless you read the fine print at the bottom of the company’s homepage. Caveat Emptor!

Warning Sign Number Four: “Possible Matches” On a Report

In one particularly startling case that became the subject of a 2011 federal lawsuit in Illinois, a background report on a young white job applicant in his 20s listed several “possible matches” in a nationwide database. According to court documents, three of those “matches” were for a 58-year-old black male who had been convicted of rape in another state in 1987 — when the white applicant was not yet 4 years old.

If a background check only identifies “possible matches” and doesn’t offer a full-service option to cross-check and eliminate erroneous matches, your best option is to look for a trustworthy background screening company that discloses its methods and sources and offers a variety of service levels suitable to different needs.

Warning Sign Number Five: They Don’t Say Much About Their Methods

A reputable background screening firm takes professional pride in their methods, and they’ll tell you about them: things like sources used, whether databases are refreshed regularly with updates and the way they gather the data on any individual report. If their website simply says “we use all state and national criminal databases,” that really doesn’t tell you much – other than that you should look elsewhere. If they rely on bulk dissemination of state and national databases which they purchase only once or twice a year, it can result in many errors.

Warning Sign Number Six: They Subcontract The Background Screening Work

If the company’s website mentions another source as their partner, that may not even be where it ends. Hey, does that mean the work you’re outsourcing is getting outsourced by the outsourcer? Yes, it happens. And the further out that work gets contracted, the less transparency and accountability there is to you as the client.

The Worse News: Both Employers AND Background Check Firms Can Be Liable for Harm Caused By Faulty Reports

The Federal Trade Commission and the Consumer Financial Protection Bureau are required to ensure that reporting companies obey the Fair Credit Reporting Act, which requires them to strive for accuracy.

The law requires that companies furnishing reports drawn from public records for employment purposes must notify the people named in the reports in a timely manner, so any inaccuracies in the data can be challenged and if a mistake is proven, so that public records can be corrected to prevent future errors. The employer who ordered the report has the same duty, as in most cases they are the ones dealing directly with applicants.

Employers can also find themselves facing class action lawsuits for sloppy handling of criminal background report information, usually stemming from a bad background report.

Starbucks Corp. was recently sued in a class action brought by a Colorado man who claims he was denied a job based on an allegedly inaccurate background check and is suing the coffeehouse chain for violations of the federal Fair Credit Reporting Act.

The lesson? Know what’s required under the FCRA, proceed with caution, read the fine print, and watch for all these warning signs before choosing who will do your next pre-employment background screening.