5 Red Flag Practices to Avoid When Choosing a Background Screening Vendor

June 1, 2017 | Bryan Barajas

How does one select the right background screening company?  We all know the basic elements of putting together an RFP but there are other more important factors that are essential to help your company avoid costly litigation. Today, as companies seek to constrain costs, it is a group effort with subject matter experts providing input into the RFP questions to be presented by purchasing departments who will make the first cut of respondents.  Often, the purchasing department will make the initial evaluation of RFP results on cost alone and allow only the lowest cost providers to be submitted to the business users for consideration. The unintended consequence of putting price before subject matter expertise is that research quality and applicant experience will suffer and your company could be at risk for litigation.

The litigation landscape is fierce against employers and those low-cost providers alleging violations of law precipitated by the very shortcuts that are market driven by low pricing.  There are ways to evaluate a background screening partner and survey litigation trends while offering guidance to avoid litigation traps.

Fred Giles, Cisive’s SVP of Strategic Initiatives, assessed the litigation landscape and created a survey of recent litigation activity.  A quick look at the survey from January of 2016 to May of 2017 for just four of the larger companies in the background industry reveals 79 allegations of FCRA violations. Those suits named the background company as plaintiff 56 times, and the employer as one of the plaintiffs 39 times. Perhaps most concerning, almost all were certified Class Actions! Of course, all cases involved at least one applicant and were the result of perceived or actual poor applicant experiences serious enough to involve the courts. If quickly identifying 79 FCRA related allegations in less than 2 years involving just four of the industry’s largest companies was not concerning enough, consider that additionally, cases alleging another 75 FCRA violations were settled in that time frame by those same 4 companies! These suits have become so lucrative for plaintiffs bar (remember that the actual class members end up receiving only token amounts in the settlements), that there are plaintiffs recycled or named in several suits against multiple companies now and we can expect these suits to continue despite the Spokeo decision (which is a topic for another time).

There are common industry practices that can lead to litigation and an employer seeking a background report provider should specifically guard against such practices.

Red Flag Practices

  1. Unrealistic Turnaround Time: The truth is that raw data only becomes actionable information when it is properly sourced, verified, and filtered.  There are no free lunches. If one or more prospective background providers are offering turnaround times and prices that appear to be far better than others that may suggest dangerous shortcuts such as the use of raw database searches or unverified reports.  These are precisely the shortcuts that drag both the provider and the employer into court on allegations of FCRA violations.  Significantly lower numbers on package pricing may indicate that either the lead frequency assumptions were under-recognized to achieve an artificially low bid, which will balloon in practice after an award is made, or is indicative of habitually shoddy research that intentionally fails to include all appropriate name and address combinations exposing the employer to unanticipated risk. Cheap and easy may be fast and sleazy!
  2. Over reliance on “national” criminal database: There is no such commercially available product as a true national database. While the use of compiled criminal databases is a recommended supplemental practice to cover a wider scope since most state courts are accessed only on a county level, there are huge and significant portions of the country that are not covered by these datasets.  Even when used properly as a supplemental criminal source, the results need to be verified with research conducted in the appropriate court as the data is often incomplete, certainly not up to date and lacking sufficient identifiers for a positive match.  Unfortunately, there are background companies who will provide these databases as standalone searches either because they fail to educate their clients as to the shortcomings or to appease employers who think they only need cheap, quick, and easy.  Over-reliance on compiled databases is another quick route to a rotten candidate experience and civil action.
  3. Disclaimers: Background providers should stand behind their work, period. Any company that includes disclaimers about accuracy or completeness on their reports or in their service agreements is informing the employer that they can expect to be sued over their reports and that the background provider is expressly not standing behind the quality of their work.  Ask for sample reports and service agreements to examine to avoid poor quality work hiding behind disclaimers. Caveat emptor!
  4. Absence of regular consultative engagement: In evaluating prospective background providers, be sure to review RFP or bid response materials for evidence of a true consultative partnership. In the pre-award phase, perhaps the clearest indication of the correct approach is the inclusion of a proposed plan to hold regular and frequent program reviews with the employer.  While the preferred frequency may shift over time, these meetings ensure thoughtful two-way discussions of the program address not only tactical issues that may arise but also more strategic and consultative opportunities to improve the candidate or employer experience with the program.  As the laws evolve, both statutory and those driven by case law, these discussions can address those changes to adjust the program accordingly.
  5. Offshoring: The only reason to offshore is to lower cost. Quality is not a driving factor and, in fact, part of the offshoring decision equation is how to compensate for all the potential pitfalls of offshoring: distance and time-zone differences, turnover, lack of loyalty caused by low wages and competing interests offering pennies per hour more, and physical and cyber security issues. In today’s litigious environment and with increasing cyber threats, the loss of data and control over personally identifiable information (PII) is a paramount concern for businesses.  Offshoring increases those risks for very little return.

Selecting a background screening provider is not a simple task, and the stakes are high.  There is risk to the company and its employees and shareholders if the background screening program is deficient. It should not be assumed when reviewing pricing proposed in response to an RFP that you are seeing a true “apples to apples” comparison.  The quality of background services varies widely and does matter.  The wrong decisions can be very costly both in monetary terms and in reputational damage in the marketplace at large as well as perhaps, most significantly, in the talent marketplace.  Understand the red flags. Be prepared to evaluate quality and organizational fit to assess the long-term cost of your relationship with a background provider.  Those who persist in chasing pennies in the selection phase will be feeding dollars to plaintiff’s bar in the future.

Cisive is relentless in its mission to keep its clients out of harm’s way! To learn more, call 1-866-557-5984 or click here.



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