Background Screening Firm Criticized for Offshoring Jobs and Personal Data of Americans to Foreign Country

A letter published on the Cleveland.com website criticizes a U.S.-based background screening firm for laying off local workers in the Ohio area in March of 2012 and “offshoring” both jobs and the personal data of American consumers collected for background checks outside of the country. The full text of the letter, written by Katharine Sarlog, a former employee of the company who was recently laid off, is available by clicking here: Katharine Sarlog letter.

In her letter, Sarlog begins by saying she is writing to express her “indignation” regarding the background screening company’s “decision to eliminate the majority of its work force in Ohio and send those positions to a thriving office in Mumbai, India, an office that currently employs 1,017 individuals.”

Sarlog continues: “On March 27, all employees received an e-mail directing them to a meeting at which we were informed that the majority of workers were receiving 60 days’ notice (myself being one of the casualties). A few new jobs are being added for which we can all compete in Darwinian fashion, but the processing jobs (which comprised a bulk of the employment) are gone.”

Sarlog goes on to say the fact that the background screening company “is growing and profiting by shipping jobs to Mumbai is reprehensible. And while the company may make the most profit from this decision, it is stripping away livelihoods with no thought to the ramifications to the country to which it claims citizenship.”

Sarlog emphasizes that her former employer, which she describes as one of the largest screening companies in the United States, “deals with confidential records containing Social Security numbers, birth dates, addresses, etc. that are now being processed by individuals in Mumbai. Most clients are probably unaware that these services are being done out of the country, and certainly most job applicants are unaware, although as an applicant desiring a job there is little option but to sign and allow a background check to be done.”

Sarlog concludes the letter by saying she harbors “no ill will toward Mumbai and those who are seeking to improve their standard of living, which is the only good that seems to have occurred” but that something should be done about the practice of offshoring. “Legislation needs to be passed to remove incentives for corporations to offshore and outsource jobs. More jobs need to be created here, not shifted elsewhere, for this country to thrive and allow its citizens to have hope for the future.”

As mentioned earlier in the ESR News blog ‘Larger Background Screening Companies Continue the Move to Offshore Processing of Background Check Reports,’ the Associated Press (AP) reported that another background check company, a Minneapolis, Minnesota-based Consumer Reporting Agency (CRA) that performs employment screening for businesses, will close two offices in South Dakota by the end of the year due to restructuring and move those jobs to new sites in Arizona, India, and the Philippines. The Associated Press story is available here: AP story.

However, along with the cheaper production and labor costs and increased profits for U.S. background screening companies that engage in offshoring, the practice potentially has negative side effects for both employers and consumers, according to a white paper released by Employment Screening Resources (ESR) titled ‘The Dangers of Offshoring Personally Identifiable Information (PII) Outside of United States’:

When a United States resident applies for a job, they are likely to undergo a pre-employment background check. A disclosure and consent form required by law is completed by the applicant where they provide among other things their name, date of birth, and Social Security number (“SSN”) — in other words, everything needed for identity theft.  What job applicants do not know is that with some CRAs there is a substantial likelihood that their Personally Identifiable Information (“PII”) will end up outside the U.S. and its territories in a foreign call center or data processing location well beyond the protection of U.S. privacy laws through the process known as “offshoring” The practice of offshoring provides virtually no protection against identity theft.

It is not relevant where a firm’s servers are located.  If an offshore worker is able to access PII, then the potential for Identity Theft exists.  Nor is the formal legal relationship between the U.S. firm and the offshore worker relevant in the least.  It does not matter if the offshore worker is an employee of the American firm, an employee of some legal subsidiary, an employee of a firm hired by the U.S. firm, or an independent contractor — once data goes offshore, U.S. legal protections vanish and there is strong historic evidence that there is a risk of identity theft.

The complimentary white paper ‘The Dangers of Offshoring Personally Identifiable Information (PII) Outside of United States’ available at http://www.ESRcheck.com/Download/ also details the following negative side effects of offshoring PII outside the country:

  • Once PII goes offshore, it is beyond the protections if U.S. privacy laws. An American who is the victim of identity theft as a result of offshoring cannot as a practical matter call foreign Police Departments and expect help.
  • Regardless of whether the information remains on the servers of the U.S. firm and is accessed abroad, or whether the foreign workers are technically on the payroll of the U.S. firm or a subsidiary, the problem is that a worker outside of the U.S. has access to PII.
  • Offshoring Information Technology (IT) jobs abroad can increase security risks. A survey of 350 IT Managers quoted in Security Management Magazine found that 69 percent of respondents said they thought outsourcing decreased network security while 61 percent said their company had experienced a data breach.
  • The American Transcription Association (ATA) is against the offshoring of transcription to workers outside of the United States because sending personal information outside of the country can lead to unsecured transfer of personal data and offshoring work also means U.S.-based transcriptionists are losing jobs.
  • Sensitive medical information can be compromised. For example, a California hospital outsourced its medical transcribing and the work ended up in Pakistan. A medical transcriber in Pakistan embroiled in a dispute with her employer about wages threatened to publish the medical records of thousands of Americans on the Internet. Needless to say, the hospital suffered a great deal of negative publicity and the confidentially of medical records for many Americans was endangered.
  • Generally, firms that offshore provide little or no disclosure to their clients or the client’s customers to avoid negative implications associated with the practice. California passed what appears to be the first law in the nation to address offshoring with Senate Bill 909 (SB 909), which took effect January 1, 2012. The California law does not prohibit or regulate offshoring, but amends the California Investigative Consumer Reporting Agencies Act (ICRA) that regulates background checks in California to require that background check firms doing business in the state disclose in their privacy policies whether a consumer’s PII will be sent outside the country. It also requires that employer place the privacy policy of their screening firm on the authorization and disclosure form needed for a background check and provides for damages if consumers are harmed by offshoring.

To alert employers and job seekers about the potential dangers caused by background check firms offshoring PII, a group of more than 170 like-minded Consumer Reporting Agencies formed the industry group ‘ConcernedCRAs’ that endorses and subscribes to a set of standards that opposes the processing of consumer reports outside of the United States. For more information, visit http://www.concernedcras.com/no_offshoring.htm.

As a member of ConcernedCRAs, Employment Screening Resources (ESR) does not offshore PII and all processing and preparation of background checks are performed exclusively in the United States, with the only exception being international verification using information outside the country. ESR was also the third background screening firm in the U.S. to become “Safe Harbor” Certified for data privacy protection.

For more information about the practice of offshoring, read ESR News blogs tagged ‘offshoring’ at http://www.esrcheck.com/wordpress/tag/offshoring/.  For more information about Employment Screening Resources (ESR)  – ‘The Background Check Authority’ and nationwide background screening company accredited by The National Association of Professional Background Screeners (NAPBS®) – visit http://www.esrcheck.com/ or call 415.898.0044.

Sources:
Katharine Sarlog letter.
http://www.cbsnews.com/8301-505245_162-57423199/mn-company-closing-2-offices-in-south-dakota/
http://www.esrcheck.com/wordpress/2012/05/02/larger-background-screening-companies-continue-the-move-to-offshore-processing-of-background-check-reports/
http://www.esrcheck.com/wordpress/2012/03/21/dangers-of-background-check-firms-offshoring-personal-data-of-americans-outside-of-us-revealed-in-whitepaper/
http://en.wikipedia.org/wiki/Personally_identifiable_information#Examples
http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0901-0950/sb_909_bill_20100929_chaptered.pdf

About Employment Screening Resources (ESR):

Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/ or call 415.898.0044 or 888.999.4474.

About ESR News:

The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com.

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