Background Screening Industry Faces Greater Scrutiny after Accuracy of Criminal Background Checks Questioned

In 2012, after reported cases of inaccurate criminal background checks costing job seekers employment, the background screening industry faced greater scrutiny over accuracy of reports. This increased attention included a Federal Trade Commission (FTC) report recommending regulations on data brokers, the FTC charging companies with alleged Fair Credit Reporting Act (FCRA) violations, a National Consumer Law Center (NCLC) report on inaccurate background checks, two New York Times editorials, the Consumer Financial Protection Bureau (CFPB) increasing supervision of background checks, and an NBC Today Show report on background check errors. In response, the National Association of Professional Background Screeners (NAPBS) refuted reports critical of the screening industry and pointed to an accreditation program created to improve accuracy. This focus on accuracy is Trend 1 of the 6th Annual ‘ESR Top Ten Background Check Trends for 2013’ available at http://www.esrcheck.com/Top-Ten-Background-Check-Trends-for-2013.php.

In March 2012, the FTC, the nation’s chief privacy policy and enforcement agency, issued a report – ‘Protecting Consumer Privacy in an Era of Rapid Change: Recommendations For Businesses and Policymakers’ – urging businesses to adopt best practices to protect the privacy of American consumers. The report contained important recommendations regarding data brokers and give them greater control over the collection and use of their personal data. One recommendation was that Congress enacts data broker legislation. The report is available at http://www.ftc.gov/os/2012/03/120326privacyreport.pdf.

The FTC was also active on the legal front. In June 2012, in the first FTC case to address the sale of Internet and social media data in the employment screening context, a data broker agreed to pay a $800,000 fine to settle FTC charges that the company marketed profiles to companies in the human resources, background screening, and recruiting industries without taking steps to protect consumers required under the FCRA. For more information, read http://www.ftc.gov/opa/2012/06/spokeo.shtm.

Later on in the year, in a case representing the first time the FTC charged a background screening firm that delivers reports to employers with violating the FCRA, a background screening firm agreed to pay a $2.6 million penalty to settle charges it violated the FCRA. In both cases, the FTC charged the companies violated the FCRA by failing to use reasonable procedures to assure the maximum possible accuracy of data provided. For more information, read http://www.ftc.gov/opa/2012/08/hireright.shtm.

With background check firms facing greater scrutiny for the accuracy of their reports, employers should be more diligent in hiring screening firms and should “screen the screeners.” Employers need to kick the tires and make sure to ask enough questions about background check firms they may want to use for employment screening. Employers want to make sure nothing is happening similar to what FTC alleged.

In April 2012, a report on background check companies from the NCLC called ‘Broken Records: How Errors by Criminal Background Checking Companies Harm Workers and Businesses’ claimed mistakes on criminal background screening reports conducted for employers prevents many job seekers from finding work. The report is available at http://www.nclc.org/issues/broken-records.html.

However, the NCLC report was itself flawed with errors and inaccuracy. To address the erroneous information and unfounded conclusions in the report, I wrote an article, ‘Consumer Group Report on Inaccurate Criminal Background Check Reports Loses Impact Due to Lack of Objectivity and Errors,’ that is available at http://www.esrcheck.com/articles/NCLC-Report-on-Criminal-Background-Checks-Inaccurate.php.

While the NCLC report suggests inaccurate criminal background checks are widespread, the report only cites a handful of anecdotal stories and some court cases where an inaccurate background check had grave consequences on a consumer’s ability to get a job out of the millions of background checks conducted yearly. Statements in the report such as “professional background screening companies routinely make mistakes” and “criminal background checks often contain incorrect information or sealed information” are simply not supported by the few cases and anecdotes. Consequently, this report on errors and inaccurate information is itself fatally flawed with errors and inaccuracy.”   Also, the NCLC report apparently did not appreciate or understand the difference between “data brokers” that dispense aggregated/unconfirmed data and Consumer Reporting Agencies (CRAs) that conduct FCRA regulated background checks using material from a number of sources to provide a report where all information reported has been confirmed at the source during its preparation.

The report erroneously focused on some data brokers who assemble and sell unconfirmed bulk data. As a result, the report failed to understand the active role that CRAs play in working with consumers. In lumping CRAs together with data brokers, the NCLC report did not note that a group of approximately 170  leading CRAs have formed a group called ‘Concerned CRAs’ to publically reject the use of databases without taking the steps necessary to a ensure accuracy and completeness as required under the FCRA.  The Concerned CRAs position on bulk data and offshoring can be found at http://www.concernedcras.com/.

In June 2012, the NAPBS – a non-profit trade association for the screening industry – announced that a study of background screening companies affirms the accuracy of background checks and refuted the NCLC report that accused background screeners of routinely making mistakes. The NAPBS report, validated by veteran market research agency Mathew Greenwald & Associates in Washington, D.C., found that 98 percent of background screening providers surveyed encountered consumer disputes less than 5 percent of the time out of millions of background checks performed annually, and more than 95 percent of those disputed background check reports were ultimately found to be accurate. The NAPBS press release is available at: http://www.prweb.com/releases/prweb2012/6/prweb9603002.htm.

In another sign that accuracy becoming the number one issue with criminal background checks in 2012, two editorials published in the New York Times – ‘Faulty Criminal Background Checks’ and ‘Accuracy in Criminal Background Checks’ – both examined the accuracy of criminal background checks used by employers and called for more regulation of the screening industry by the federal government.  The opening paragraphs of both editorials, which appeared in the Times less than three weeks apart in July and August, accuse the federal government of not paying enough attention to background check providers and call for more scrutiny of the entire industry:

  • ‘Faulty Criminal Background Checks’ (Published on July 24, 2012): “The federal government has historically paid little attention to the companies that collect and sell the data used by employers in hiring decisions — including data about an applicant’s criminal history.” See: http://www.nytimes.com/2012/07/25/opinion/faulty-criminal-background-checks.html.
  • ‘Accuracy in Criminal Background Checks’ (Published August 9, 2012): “For far too long, the federal government has neglected its responsibility for regulating the companies that provide criminal background checks used by 9 in 10 companies to screen job applicants. The damage done to job seekers by flawed and unreliable data — a common problem with such services — can be devastating.” See: and http://www.nytimes.com/2012/08/10/opinion/accuracy-in-criminal-background-checks.html.

In August 2012, the CFPB – established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) – announced that three FCRA mandated forms in the background check process would be modified by January 1, 2013. The forms – include ‘A Summary of Your Rights Under the Fair Credit Reporting Act,’ ‘NOTICE TO USERS OF CONSUMER REPORTS: OBLIGATIONS OF USERS UNDER THE FCRA,’ and ‘NOTICE TO FURNISHERS OF INFORMATION: OBLIGATIONS OF FURNISHERS UNDER THE FCRA’ – were changed to show consumers could obtain information about their rights under the FCRA from the CFPB instead of the FTC. In November 2012, the CFPB announced in the Federal Register corrections to errors in the earlier versions of the forms available at: https://www.federalregister.gov/articles/2012/11/14/2012-27581/fair-credit-reporting-regulation-v-correction.

In November 2012, NAPBS Chairman Fred Giles called an NBC Today Show report about background check firms making errors that mistake innocent people for criminals causing them to lose jobs “misleading” as well as “potentially dangerous.” In the NAPBS statement, Giles said the report did “a disservice to employers and the general public by focusing on a small number of unfortunate instances in an attempt to indict an entire industry that is critical to the safety of our homes and workplaces.” By relying on only a few examples, Giles said the Today Show “ignored the vast majority of the millions of background screens conducted each year and the serious workplace problems they helped to prevent.”

Giles said that NAPBS members actively help consumers resolve disputed records and noted that “fewer than 1% of consumer disputed records are actually found to contain an error.” Giles added: “NAPBS has developed a comprehensive individual certification program and a company based accreditation program with more than 58 specific standards of compliance to ensure our members provide the highest level of performance.” The full NAPBS statement from Chairman Fred Giles is available at http://www.napbs.com/files/napbs_today_show_response.pdf. The NBC Today Show report is available at http://today.msnbc.msn.com/id/49505767/ns/today-today_rossen_reports/.

In 2010, the NAPBS launched the Background Screening Agency Accreditation Program (BSAAP) to promote best practices, legal compliance, and standards that protect consumers in the employment screening industry. The Background Screening Credentialing Council (BSCC) oversees the application process and ensures that a background screening organization seeking accreditation meets or exceeds measurable standards of competence. To become accredited, background screening organizations must pass a rigorous onsite audit conducted by an independent auditing firm that examines policies and procedures related to six critical areas of screening: Consumer Protection; Legal Compliance; Client Education; Product Standards; Service Standards, and; General Business Practices. The NAPBS is the leading national resource for issues related to the background screening industry. Any U.S.-based employment screening organization is eligible to apply for NAPBS accreditation. A copy of the standard, policies, and procedures is available on the NAPBS website at http://www.napbs.com/.

The new accreditation program for background screeners offered by the NAPBS is an effective way of giving employers some peace of mind regarding the quality of screening services. The accreditation process is extremely intensive and the best way of ensuring that a background screening firm is providing accurate information in compliance with all the various laws that are involved. Employment Screening Resources (ESR) is accredited by the NAPBS for successfully proving compliance with the BSAAP. For more information, visit: http://www.esrcheck.com/ESR-NAPBS-Accreditation.php.

Overall, while these types of stories about inaccurate background checks may make good television and newspaper copy, but they do a tremendous disservice to the public. The screening industry protects American consumers and businesses through  millions of background checks every year, but the reports only focus on a couple of unfortunate incidents while ignoring all of the harm that can occur if these checks did not happen.

Certainly errors can occur, but it is critical to keep in mind that background checks are done only with the specific written authorization of consumers, who also receive detailed disclosures about the process and their rights as required by existing federal and state law. Nothing is done in secret or without the consumer’s full knowledge and consent. It is also critical to understand that background checks are a mission critical process for employers of all sizes to prevent the legal and financial nightmare associated with even a single bad hire. The screening industry provides millions of reports every year, and against that backdrop, the number of complaints, issues, or problems is infinitesimally small.   No one disputes that an erroneous criminal record costing a job has terrible and profound impact on a person’s life. However, that injustice can be corrected and the person will have the opportunity to move on. Where the injustice causes measurable harm, they can also seek monetary damages through the courts. But how does a society undo the impact and scars of a murder, rape, child molestation, or other sexual assaults or violent crimes that can result from a failure to perform criminal background checks? A fair minded report would at least recognize that there is a legitimate societal need for these checks to occur.

The real issue is that background checks occur at the intersection of two fundamental American values: security and giving people a second chance. On the one hand, background checks can promote safety, security, and honesty while lessening the chance for workplace violence or the hiring of unqualified workers with fake credentials. On the other hand, employers using background checks should be concerned with issues of fairness, privacy, and discrimination, as well as the need to give ex-offenders a second chance to work so that they can become law abiding tax paying citizens. Otherwise, we will build more prisons and less schools and hospitals.

Today the news story may be on how errors on a background check can cause an applicant to lose a job, which is very unfortunate. However, tomorrow the news story may be how a violent crime such as rape or murder could have been prevented by a background check and reporters will ask why the employer did not perform due diligence. You can’t have it both ways.

For more information about background checks, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ and nationwide background screening firm accredited by the NAPBS – at http://www.esrcheck.com or toll free 888.999.4474. The 6th Annual ‘ESR Top Ten Background Check Trends for 2013’ is at http://www.esrcheck.com/Top-Ten-Background-Check-Trends-for-2013.php.

More information about these trends is available in the updated 2nd Edition of “The Safe Hiring Manual” by ESR Founder and CEO Attorney Lester Rosen. For more information, visit http://www.esrcheck.com/SafeHiringManual.php.

Sources: http://www.esrcheck.com/wordpress/2012/11/09/national-association-of-professional-background-screeners-responds-to-nbc-today-show-report-on-background-checks/ http://www.esrcheck.com/wordpress/2012/10/08/background-check-firms-under-greater-scrutiny-in-wake-of-2-6-million-dollar-penalty-for-alleged-fcra-violations/ http://www.esrcheck.com/wordpress/2012/08/13/accuracy-of-criminal-background-checks-by-employers-examined-in-two-recent-ny-times-editorials/ http://www.esrcheck.com/wordpress/2012/08/08/background-screening-company-to-pay-2-6-million-dollar-penalty-to-settle-ftc-charges-of-multiple-fcra-violations/ http://www.esrcheck.com/wordpress/2012/06/20/national-association-of-professional-background-screeners-to-release-study-affirming-accuracy-of-background-checks/ http://www.esrcheck.com/wordpress/2012/04/16/inaccurate-criminal-background-checks-from-data-brokers-that-cost-job-seekers-employment-coming-under-fire/ http://www.esrcheck.com/wordpress/2012/04/13/report-claiming-inaccurate-criminal-background-checks-cost-jobseekers-employment-contains-inaccuracies-according-to-safe-hiring-expert/

About Employment Screening Resources (ESR):

Founded by safe hiring expert Attorney Les Rosen in 1997, Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information that empowers employers to make informed hiring decisions for the benefit of their organizations, employees, and the public. CEO Rosen literally wrote the book on background checks with “The Safe Hiring Manual” and ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percent of screening firms. Employers choosing ESR know they have selected an agency meeting the highest industry standards. To learn more about ESR, visit http://www.esrcheck.com or call toll free 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. To subscribe to the ESR News Blog Feed, visit http://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit http://www.esrcheck.com/Newsletter/.

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