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Download case studies of real people harmed by poor practices and errors (PDF)
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Published April 11, 2012
©National Consumer Law Center
Since September 11, 2001, there's been an explosion in criminal background checks for job applicants by employers, yet many reports are riddled with errors. An industry-wide lack of accountability and incentives to cut corners mean that tens of millions of workers may pay for these third-party errors with their jobs while employers waste money and miss out on hiring qualified employees.
This report investigates common poor practices and mistakes with recommendations for solutions and the role of federal agencies and state government in holding background screening companies accountable for accurate work. It is essential that the Wild West of employment screening be reined in so consumers are not guilty until proven innocent.
About 93% of employers conduct criminal background checks on some applicants, while 73% of employers conduct checks on all applicants, according to a 2010 survey by the Society for Human Resource Management.
Nearly 1 in 4 adults (an estimated 65 million people) in the U.S. have a criminal record.
Many additional people without a criminal record are wrongly tagged as having a record.
There are no licensing requirements for criminal background agencies. Anyone with a computer and access to records can start a business; the total number of companies is unknown.
There is no central system for registration for background checking companies. A consumer can't regularly order his or her own report to review for errors as there is no central source to find and request a copy.
Many companies attempt to skirt the federal Fair Credit Reporting Act (FCRA) by subcontracting work to other vendors or disclaiming responsibility.
Employers often fail to comply with the FCRA. This makes it difficult to know whether consumers were denied employment due to a background check report.
The National Consumer Law Center report recommends that federal regulatory agencies and states use their authority to rein in industry-wide problems (see page 35 of full report for detailed recommendations).
1. The Consumer Financial Protection Bureau (CFPB) can issue regulations under the Fair Credit Reporting Act (enacted in 1970 by Congress to protect the privacy of consumers) to ensure greater accuracy of background checks. The CFPB can also require consumer reporting agencies to register so consumers can correct inaccurate and misleading information.
2. The Federal Trade Commission can investigate major commercial background screening companies for common FCRA violations and investigate major, nationwide employers for compliance with the FCRA requirements for users of consumer reports for employment purposes.
3. State legislatures, administrative agencies and courts can require companies that receive bulk data from court databases to promptly delete sealed and expunged criminal records and routinely update their records. States can also audit companies and if not in compliance, states can revoke the companies' receipt of data.