FTC Verifies Internet Background Checks from Consumer Reporting Agencies Subject to Rules of Fair Credit Reporting Act

The Internet has recently buzzed with stories about how the Federal Trade Commission (FTC) has given the official “OK” for Internet background checks of job applicants that would include up to seven years of information from social networking sites such as Facebook and Twitter that are in compliance with the federal Fair Credit Reporting Act (FCRA) regulating the collection, dissemination, and use of consumer information.

However, contrary to reports calling the FTC’s action an official endorsement, a recent blog on the FTC web site, “The Fair Credit Reporting Act & Social Media: What Businesses Should Know,” indicates that Internet background checks using social media information simply must follow the same FCRA rules that apply to the more traditional information – employment and salary history, criminal records, and credit reports – that FCRA compliant background screening firms and employers have used in the past.

The FTC blog states that regardless of the type of information in a report that employers use when making hiring decisions, the rules are the same. “Companies providing reports to employers – and employers using reports – must comply with the Fair Credit Reporting Act.” The blog also mentions an investigation that the FTC recently dropped:

“The FTC staff recently looked at a company selling background reports that include information from social media to see if they were complying with FCRA. Staff’s letter to the company emphasized that when reports include information derived from social media, the same rules apply. For example, companies selling background reports must take reasonable steps to ensure the maximum possible accuracy of what’s reported from social networks and that it relates to the correct person. They have to comply with other FCRA sections, too – like providing copies of reports to people and having a process in place if people dispute what’s said about them in a report. In addition, companies must give employers who use their reports information about employers’ responsibilities under FCRA – like their obligation to provide employees or applicants with advance notice of any adverse action taken on the basis of the reports. Another key requirement: Companies selling background reports for employment must require that employers certify the report won’t be used in a way that would violate federal or state equal employment opportunity laws or regulations. Of course, given the sensitive nature of the information in reports, everyone – companies selling the reports and employers using them – has a legal obligation to keep them secure and dispose of them properly.”

The FTC – the government’s consumer protection agency – had been investigating an Internet and social media background screening service that offered employers background screening reports containing information gathered from social networking sites. In a letter from the FTC dated May 9, 2011, the agency indicated they had completed the investigation and determined that no further action was warranted. The FTC letter concludes:

“This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take further action as the public interest may require.”

A major issue facing both employers that use Internet background checks, and the firms that provide such services, is whether the information found in the Internet about job applicants is credible, accurate, and authentic – in other words, true. Employers should consider if what a job applicant says online is true, and if true, whether it would be a valid predictor of job performance, or whether it would be employment related at all, as well as non-discriminatory. After all, people have been known to exaggerate or make things up.

Employers need to make sure what they see online actually refers to the job applicant in question. There are cases of false postings under another person’s name on the Internet – a sort of “online identity theft.” If negative information is posted anonymously online, it may be “cyber slamming” where a person commits defamation without anyone knowing their real identity or sets up a fake website that does not belong to the supposed owner. Also, most people have “computer twins,” people with the exact same names online.

Under FCRA section 607(b), a Consumer Reporting Agency (CRA) performing background checks needs to exercise “reasonable procedures to assure maximum possible accuracy.” The issue is how to know what information is real or authentic before reporting it to an employer. If a social networking site contains negative information, how is the firm that supplies the information to go about verifying that it is accurate, authentic, and belongs to the applicant? If the search happens to turn up a criminal record, the obligations are even heavier.

To minimize the risks of using the Internet for background checks, Employment Screening Resources (ESR) – a nationwide background screening provider accredited by The National Association of Professional Background Screeners (NAPBS®) – will soon offer the white paper ‘Managing the Risks of Using the Internet for Employment Screening Background Checks’ that provides an informative introduction to using Internet search engines such as Google and social network sites such as Facebook for employment background checks.

In the meantime, employers may consider taking the following steps if they decide to conduct Internet background checks to avoid possible legal risks:

  • If an employer uses the Internet, they should first consult their attorney in order to develop a written policy and fair and non-discriminatory procedures designed to locate information that is a valid predictor of job performance, and non-discriminatory. Employers should focus on objective criteria.
  • As a general rule, the later in the hiring process the Internet is used, the less open an employer may be to suggestions that matters viewed on the Internet were used in a discriminatory fashion. The most conservative approach is to not use the Internet until AFTER there has been a conditional job offer. 
  • Employers need to be concerned whether information found online is potentially discriminatory to job candidates who are members of protected classes based on prohibited criteria such as: race, creed, color, nationality, ancestry, medical condition, disability, marital status, sex (including pregnancy), sexual preference, or age (40+). All of these protected criteria of applicants may be revealed by an Internet search.
  • In addition, employers need to be concerned if information found on the Internet violates state laws concerning legal “off duty” conduct.
  • For legal protection, the most conservative approach is to perform an Internet search only after there is consent from the job applicant and a job offer is made contingent upon completion of a background check that is satisfactory to the employer.
  • Employers should not use any fake identities or engage in “pretexting” to gain access to information.
  • Whatever an employer’s policy is, it should be written.  For employers that recruit at college, there is a trend to require employers to notify students ahead of time as to their policy for searching the Internet for an applicant’s online identity.
  • Another method employers may use is to have a person in-house not connected to any hiring decisions review social network sites, in order to ensure impermissible or discriminatory information is not given to the decision maker. The in-house background screening should also have training in the non-discriminatory use of online information, knowledge of the job description, and use objective methods that are the same for all job candidates for each type of position. That way, only permissible information is transmitted to the person that is making the decision.

The bottom line when using the Internet for employment screening background checks is that employers should proceed with caution. Using the Internet to background check job candidates is not risk-free, especially since there has yet to be clear law or court cases that show how to proceed in this area. In the meantime, employers should not assume that everything is fair game online in the pursuit of social media information about job applicants.

To read the FTC blog, “The Fair Credit Reporting Act & Social Media: What Businesses Should Know,” visit http://business.ftc.gov/blog/2011/06/fair-credit-reporting-act-social-media-what-businesses-should-know.

For more information about background checks, visit the Employment Screening Resources (ESR) website at http://www.ESrcheck.com.

About Employment Screening Resources (ESR): Founded in 1997 in the San Francisco area with a mission to help employers and employees maintain safe workplaces, Employment Screening Resources (ESR) is accredited by The National Association of Professional Background Screeners (NAPBS®) and provides industry leading technology, legal compliance, service, turnaround, and accuracy. ESR also wrote the book on background checks with ‘The Safe Hiring Manual’ by founder and President Lester Rosen. For more information about ESR, visit http://www.ESRcheck.com.