The importance of conducting background checks
THE IMPORTANCE OF CONDUCTING BACKGROUND CHECKS IN BUSINESS
As a business owner, you hold yourself and your business to a certain set of standards and you expect the same from your employees as well, which is why the hiring process can often be a stressful and somewhat tedious one for employers. In order to determine that applicants meet the requirements that are essential for the position needing to be filled, a background check is almost necessary and the best way to go about doing that. As the economy has continued to change in recent years, more and more job applicants have showed dishonesty on resumes and job applications. According to EctoHR, the number of fabrications on resumes doubled in 2009. The company went on to note that a criminal, employment or education discrepancy is found on 13.5 percent of the background checks it conducts, we believe that is much higher.
A background check is a great way to research a potential employee and establish whether or not he or she will be a good fit for your business. As long as you ensure that your screening policies and procedures are in compliance with the guidelines outlined by the Fair Credit Reporting Act (FCRA) and EEOC you will not be in violation of the rights of your applicants. As an employer, you can research a multitude of items about an applicant including anything that is considered to be public record. Public record can range from social security number confirmation and criminal activity to bankruptcy filings, property ownership and court documents. Private information including medical records, education background and military service can also be researched, but not without an applicant’s written consent. An employer can also receive a credit report upon receiving the signed authorization of the applicant as well.
When it comes to criminal records, you can often learn everything you need to know with a simple background check. Majority of states keep criminal records on file indefinitely, and those records are available to anyone who has access to them. On a federal level, the Federal Bureau of Investigation’s (FBI) National Crime Information Center (NCIC) maintains nationwide criminal records. However, those records can only be accessed by other law enforcement agencies and in our opinion isn’t that good of a criminal search. While the FCRA offers no protection on the disclosure and use of criminal information, some states have taken steps to offer applicant’s more protection. For example, the state of California has maintained that an applicant’s criminal history can only go back seven years.
Many business owners simply conduct background checks for peace of mind. However, for a number of industries like the financial services industry, screenings are required to complete the hiring process. Either way, conducting a background check is a great tool to utilize when wanting to thoroughly get to know an applicant who you are considering bringing into your business. And as a business owner, it is your right to do so.
Doing background checks correctly
The vast importance of doing background checks correctly can be seen through some simple examples of careless checks. CSO Online shares the story of how a background check mistaking the identity of an employee went significantly from bad to worse in this post on Good (and Bad) Background Checks. With so many common and similar names it is extremely important to verify every single piece of identification information you have on an individual. Minor changes in simple data such as a birth date can significantly change the results of your background check.
Taking the easy road and skipping important steps while completing a background check can have dire consequences for the individual, the company, and the background check agency. Diligentia Group explores some of the most common “bad background check” mistakes an individual or company can make in a recent blog post. These mistakes include:
- Using the Internet as your primary resource. While the Internet is full of valid information, it is also easily manipulated by anyone that has knowledge and tools to modify it.
- Searching social networking sites for accurate information.
- Relying on hand-picked personal references.
- Assuming previous employers listed on a resume have “done their homework” and surely have completed a background check on your applicant.
These easy resources can certainly provide you with an elementary understanding of your applicant, they cannot provide you with factual, relevant information you require to make the best hiring decision you can make.
ANOTHER BRIEF HISTORY ON THE FAIR CREDIT REPORTING ACT
The Fair Credit Reporting Act (FCRA) is a United States federal law that was established in 1970. Comprehensive amendments were made to the FCRA in 1996 and again in 2003 when the Fair and Accurate Credit Transactions Act (FACTA) was created. The FCRA regulates the collection, dissemination and use of consumer information. It was the first federal law that was specifically designed to regulate the use of personal information by private businesses. The FCRA is enforced by the Federal Trade Commission (FTC) and other private litigants. Companies that are regulated or partially regulated by the FCRA include Credit Reporting Agencies (CRAs), Nationwide Specialty Consumer Reporting Agencies and Information Furnishers. Those who utilize credit reporting services, such as employers, are also subject to guidelines outlined by the FCRA as well.
CRAs are organizations that collect and distribute information about consumers which is then used for things like credit evaluations and employment. CRAs have several responsibilities under the FCRA including: Providing consumers with information about themselves that can be found in the agency’s files and taking steps to verify the accuracy of any information disputed by a consumer (under FACTA, consumers can receive one free credit report per year); If negative information is removed as a result of a consumer’s dispute, CRAs may not add the information without notifying the consumer in writing within five days; and CRAs cannot retain negative information about a consumer for an extensive period of time. The FCRA describes the amount of time that negative information, such as bankruptcies and judgments, may stay on a consumer’s credit report–typically seven years from the date of the delinquency, with some exceptions. There are three major CRAs that are regulated by the FCRA including Experian, TransUnion and Equifax.
In addition to CRAs, there are also a number of information technology companies that the FCRA has classified as Nationwide Specialty Consumer Reporting Agencies. These companies report things like medical history and payments, residential history, check-writing history, employment history and insurance claims. Because these companies sell consumer credit report files, they are also required to disclose annual reports to the consumers who request them.
Information Furnishers (also known as creditors) are companies that provide information to CRAs. Under the FCRA, these information furnishers may only report a consumer’s credit report under the following guidelines: They must provide complete and accurate information; they must investigate disputed information from consumers, and they must correct errors or explain why a credit report is correct within 30 days of receipt of notice of dispute; and they must inform consumers about negative information which has been or will be placed on a consumer’s credit report within 30 days.
The FCRA limits the use of the credit reports to certain purposes including:
- Applications for credit, insurance and rentals for personal, family or household purposes.
- Employment including hiring, promotion, reassignment or retention. (A CRA may not release a credit report for employment decisions without consent.)
- Court orders.
- “Legitimate” business needs in transactions initiated by the consumer for personal, family or household purposes.
- Account review.
- Child support payment determinations.
- Law enforcement access.
A 2004 study released by the U.S. Public Interest Research Group found that 79 percent of the consumer credit reports surveyed contained some kind of error. However, the General Accountability Office also released a study disputing those numbers. The Federal Reserve Board issued a similar report. In 2007, the Consumer Data Industry Association testified that less than two percent of 52 million credit reports had data removed because it was in error.
Ultimately, the FCRA was created to offer protection to consumers. Companies and individuals who fail to remain in compliance with the FCRA’s guidelines could eventually be subjected to costly and disadvantageous consequences.
Beware of bad background screening
BEWARE OF BAD BACKGROUND SCREENINGS
As an employer or business owner, turning to a background screening company to assist you with making an informed decision about whether to hire a prospective employee or not is a wise decision, especially when it comes to wanting to protect your business. However, it is also very important to be weary of companies and websites that claim to provide background screening services, but what they really leave you with is what the industry likes to refer to as “fake background checks.” These types of background checks and background check providers allow criminal records and other red flags to go undiscovered, putting the employer and the business at risk. “Fake background checks” are happening more and more frequently. The scope and depth of a background check provider should be scrutinized closely.
In addition to being cautious of the background check provider you choose to work with, it is also important to be aware of errors that can occur on the actual background check itself. There are a variety of ways that errors can be made on an individual’s record including: Social security numbers get transposed during the data entry process; names, addresses or dates of birth getting mistyped; identities getting confused; and identity theft, which is a serious problem that is occurring more frequently particularly because of the growing practice of criminals using another name when being arrested or convicted of a crime. It can also be challenging to receive a completely thorough report because there are thousands of counties in the United States, and each one has a number of records departments. An overturned conviction that should have been erased from a person’s record may still appear on files stored at a different facility. Whatever the reason, once a mistake goes onto a person’s record, it can be very difficult to correct or remove it.
Although mistakes and errors undoubtedly occur, the frequency of this happening has been disputed by a number of industry professionals and organizations. A 2004 study released by the U.S. Public Interest Research Group found that 79 percent of the consumer credit reports surveyed contained some sort of error. However, the General Accountability Office released a study disputing those numbers. The Federal Reserve Board also issued a similar report. In 2007, the Consumer Data Industry Association testified that less than two percent of 52 million credit reports had data removed because it was in error. Regardless of what the mistake is or how it happened to occur on a report, it is ultimately up to the applicant to dispute any errors found during his or her background check and to provide proof that it is indeed incorrect. As an employer, it is just beneficial to be informed of the possibility of these types of mistakes happening.
Even with the risks and flaws associated with background screenings, the industry is still rapidly growing and has reportedly become a $2 billion business. While background checks are a great tool and resource to utilize during the employment screening process, it should not be the only factor used to determine whether or not an applicant should be considered for employment.
Here at VICTIG we pride ourselves on being compliant, using the best data and working with employers that want to good background checks. We don’t like to offer anything less than our “Nation Wide NetPlus Search”. This search includes:
- National Criminal Search – This research is used as a “safety net” search, possibly identifying criminal records in jurisdictions not researched because they were not associated with the applicant’s residential history. This is a database composed of criminal records purchased from private data sources and other criminal record sources. Although it is often sold as a “nationwide” search, it is not. This search is only useful for identifying potential cases related to the applicant. 7 year 3 County specific searches based off of the address history will be run to verify any cases at the county level. Also If records are found within this database, we will verify the case at the county level to confirm the details of those records, as required by the Fair Credit Reporting Act.
- National Sexual Offender Registry Search – Includes all offenders currently registered with the National Sex Offender Registry.
- SSN Search – Using the Social Security Number of your applicant, we provide a history of previous addresses, date of birth, and names for every person associated with that SSN.
- Alias Search – We search any alias names that come back on the SSN Search through the National Criminal at no additional cost.
- 7 year 3 County Specific Search – County level criminal searches are the best source for the most recent and up-to-date case information. A county search will typically disclose the jurisdiction, type of offense, offense description, case number and case disposition. All county-level criminal searches are FCRA compliant. Additional state access fees may apply.