Written By ESR News Blog Editor Thomas Ahearn
On October 3, 2019, the Consumer Financial Protection Bureau (CFPB) – the agency enforcing federal consumer financial laws – announced the release of a report titled “Market Snapshot: Background Screening Reports – Criminal Background Checks in Employment” that provides an overview of companies involved in the background screening industry that the report claims has earned an estimated $3.2 billion in 2019.
The CFPB report states that employers use background screening reports to evaluate prospective and current employees for employment, promotion, reassignment, or retention. Background screening reports may include credit history, public records from civil court proceedings, employment and education history, and other public record information such as arrests and convictions of individuals.
Subject to federal, state, and local law, background screening firms may provide employers with information on credit history, employment, salary, education, professional licenses, criminal arrests and convictions, driving records, drug and alcohol testing, occupational health screening, and volunteer activity, among other things. The report focuses on screenings that include criminal records checks, but also highlights:
- The background screening industry;
- How screening reports, including criminal history information, are generated;
- How screening reports are used by employers;
- Challenges related to accuracy and dispute resolution, and
- Developments in the market.
The CFPB report characterizes the background screening industry as “mature and growing, experiencing consolidation and price competition,” and identifies three key drivers of growth as increased demand due to labor market improvements, a decline in rental vacancy rates, and increased online services. The report estimates that “for 2019 there are 1,954 background screening companies with revenues of $3.2 billion.”
The CFPB report identifies challenges that screening companies, employers, and individuals screening subjects face including inconsistent systems across jurisdictions for reporting criminal records, as there are more than 13,000 state courts of record in the United States with an estimated 110,235,200 persons in their criminal history files as, according to a survey of state criminal history information.
The CFPB and the Federal Trade Commission (FTC) both enforce the Fair Credit Reporting Act (FCRA) that governs background screening, work to ensure accuracy and completeness of information in screening reports, and provide educational materials to help consumer reporting agencies (CRAs), users of consumer reports, and consumers understand their rights and responsibilities under the FCRA.
Employment Screening Resources® (ESR) – a leading global background check provider – complies with CFPB and FTC regulations to help employers remain in compliance with screening laws. ESR won the 2018 TekTonic Award from HRO Today Magazine for innovative and disruptive screening technology with the ESR Assured Compliance® Solution. To learn more about ESR, visit www.esrcheck.com.
NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.
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