When applicants in the United States apply for jobs, they usually undergo a background check using a disclosure and consent form required by law where they provide Personally Identifiable Information (“PII”) such as name, date of birth, and Social Security number (“SSN”).  What many job applicants and employers do not know is that certain U.S. background check firms “offshore” PII to foreign call centers and data processing locations beyond the protection of U.S. privacy and identity theft laws. However, many screening companies oppose the practice of “offshoring” out of concern that the practice provides little protection against identity theft and loss of privacy. The controversy over offshoring and employer concerns about the process is Trend Number 5 of the 6th Annual ‘ESR Top Ten Background Check Trends for 2013’ available at https://www.esrcheck.com/Top-Ten-Background-Check-Trends-for-2013.php. U.S. firms that offshore may use foreign workers for a number of tasks.  This can include making employment verification calls to U.S. employers and searching online sources for criminal records.  In addition to rising potential concerns about quality and legal compliance, employers and consumers alike should be made aware of the privacy dangers of offshoring that can include, identity theft, data breaches, invasion of privacy, and the lack of disclosure that data is being sent beyond the reach of U.S. privacy laws. To make matters worse, some firms may even use foreign processors working out of their own homes, which has the potential to even increase quality and privacy concerns. Employers need to know if PII is offshored to assess if the cost savings are worth the privacy and quality considerations. Consumers should be told if offshoring is sending their personal information outside of the U.S. It is not relevant where a screening 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. Personally Identifiable Information (PII) is defined as data used for distinguishing individual identity, and may include:

  • Full name.
  • Birthday and birthplace.
  • Social Security Number (SSN).
  • Vehicle registration plate number.
  • Driver’s license number.
  • Credit card number.
  • National identification number.
ESR News reported earlier in May 2012 about a letter published on the Cleveland.com website that was critical of 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 letter, written by a former employee of the company who was recently laid off, emphasized that the former employer “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.” The full text of the letter is available here: Letter on Cleveland.com. ESR News also reported in May 2012 on a story from the Associated Press (AP) that a U.S. based background check firm that performed employment screening for businesses would close two offices in South Dakota by the end of the year and move those jobs to new sites in Arizona, India, and the Philippines. The AP reported that the company said the closings in South Dakota are due to restructuring and would affect approximately 140 workers. To alert U.S.-based employers and job seekers about the potential dangers caused by background check firms offshoring, Employment Screening Resources (ESR) offers a whitepaper, ‘The Dangers of Offshoring Personally Identifiable Information (PII) Outside of United States,’ that details the hazards of sending PII to counties such as India and the Philippines beyond the reach of U.S. privacy and identity theft laws. The complimentary whitepaper, which defines “offshoring” as the practice of some U.S. companies routinely sending the PII of American consumers to foreign countries with cheaper production and labor costs to increase profits, is available at https://www.esrcheck.com/Download/. The whitepaper also outlines the negative side effects of offshoring for employers and consumers:
  • 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. A California hospital that outsourced its medical transcribing and the work ended up in Pakistan. A medical transcriber in Pakistan got into a dispute with her employer about wages and 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, although 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.
California Senate Bill 909 (SB 909) 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 read SB 909, visit: http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0901-0950/sb_909_bill_20100929_chaptered.pdf. Although the potential for data breach and violation of privacy can occur in the U.S. as well, if data is breached in the U.S. consumers have resources and recourses available to them. To help combat offshoring of PII, a group of more than 125 like-minded Consumer Reporting Agencies (“CRAs”) – another name for screening firms – formed the industry group ‘ConcernedCRAs’ that endorse and subscribe to a set of standards that opposes the processing of consumer reports outside of the United States. For more information about ‘ConcernedCRAs,’ visit http://www.concernedcras.com/. 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 U.S. ESR was also the third U.S. background screening firm to become “Safe Harbor” Certified for data privacy protection. ESR recommends that before selecting a screening firm that an employer ask questions to discover if the  firm is using any offshore workers, so an employer can make an informed choice  about their service provider. For more information about Employment Screening Resources (ESR)  – ‘The Background Check Authority’ and nationwide screening company accredited by The National Association of Professional Background Screeners (NAPBS®) – visit https://www.esrcheck.com or call Toll Free 888.999.4474. The 6th Annual ‘ESR Top Ten Background Check Trends for 2013’ is at https://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 https://www.esrcheck.com/SafeHiringManual.php. Sources: http://blog.cleveland.com/letters/2012/04/sterling_infosystems_decision.html http://news.yahoo.com/mn-company-closing-2-offices-south-dakota-173032439–finance.html https://www.esrcheck.com/wordpress/2012/05/08/background-screening-firm-criticized-for-offshoring-jobs-and-personal-data-of-americans-to-foreign-country/ https://www.esrcheck.com/wordpress/2012/05/02/larger-background-screening-companies-continue-the-move-to-offshore-processing-of-background-check-reports/ https://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): 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 https://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 [email protected]. To subscribe to the ESR News Blog Feed, visit https://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit https://www.esrcheck.com/Newsletter/.]]>