Five Considerations When Selecting a Background Screening Provider

December 18, 2018 | Shannon Shoemaker

Nine out of 10 employers run criminal background screens on applicants as part of the hiring process, according to research from the Society for Human Resource Management. And the number of Americans who have a criminal history on file—about 30 percent, or 92 million people, according to the Bureau of Justice Statistics—has increased exponentially in recent years.

Partnering with a background screening company to help find the best candidate for your open positions is always a good practice to ensure compliance. A respectable background screening provider will deliver fast, precise, and inclusive reports; following sound practices to ease your risks and enable you to hire the right people. But not all screening providers are equal.

In general, a Background Screening provider (aka Consumer Reporting Agency – CRA), is a person or company that, on a commercial basis, assembles or evaluates information on individuals for the purpose of providing “Consumer Reports” to companies. A Consumer Report, in turn, is defined to include, with certain limited exceptions, any communication of substantive information about an individual if the information was collected, is expected to be used, or is actually used, to make decisions about the individual’s eligibility for employment or similar purposes.

What to Consider When Choosing a Background Screening Provider 

There are five key considerations to review with regards to the reliability and quality standards of the background provider before making a selection.

1. Employers should work with a firm that demonstrates familiarity and compliance with the FCRA and parallel state requirements.

Background screening providers often provide several options for the nature and extent of the background investigations they conduct. Under the Fair Credit Reporting Act (FCRA) and parallel state statutes, any communication of information from an organization that is used to establish a person’s eligibility for employment is a “consumer report.” The FCRA applies if an employer engages a Consumer Reporting Agency to provide any regulated information concerning a job applicant or employee, including criminal history.

A CRA can help you navigate the ever-changing landscape of FCRA compliance. There have been many class-action suits levied at organizations that have allegedly violated the FCRA, with many of them agreeing to pay thousands to millions of dollars to settle the lawsuit. For example:

  • Omnicare agreed to pay $1.3 million in a class action settlement over allegations that the company did not provide the proper disclosures required under the Fair Credit Reporting Act during the application process.
  • Petco agreed to pay $1.2 million to settle a class action lawsuit alleging it violated the Fair Credit Reporting Act by procuring consumer reports for employment purposes without the proper disclosure and without obtaining proper authorization.
  • Frito-Lay Inc., a subsidiary of Pepsico Inc., has agreed to pay $2.4 million to settle a class action lawsuit alleging that the company violated the Fair Credit Reporting Act by using consumer credit reports when they conducted background checks as part of a hiring process without properly disclosing this practice to the job applicant.
  • Costco has agreed to pay nearly $2.5 million to end a Fair Credit Reporting Act class action lawsuit alleging the company failed to use proper stand alone disclosure notices to obtain background reports about job applicants.
  • Avis has agreed to a $2.7 million pay out to settle a class action lawsuit alleging the company violated the Fair Credit Reporting Act.


2. Price should not be the determining factor in choosing a CRA.

In the past, a company would call upon subject matter experts who were tasked with finding and vetting quality providers. Today, as companies seek to constrain costs, the subject matter expert is relegated to providing a list of RFP questions to be presented by procurement departments who will make the first cut of respondents. Often, the procurement 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 stakeholders for consideration.

Those who charge more to perform the research in a responsible manner may be eliminated without further consideration. The unintended consequence of putting price before subject matter expertise is that research quality and applicant experience suffers. Many background screening providers take shortcuts, driven by a market that is now focused almost exclusively on cost. These shortcuts have resulted in a large and growing body of litigation alleging violations of law against both employers and their background screening providers as indicated above.

Employers are liable for the content of the forms they use, even if the Consumer Reporting Agency provides the forms. Because your company is liable for its actions based on reporting from your CRA, selecting a CRA that is thorough and compliant is crucial to avoid legal action. For example, with regards to database searches, verification of potentially reportable records involves additional expense, but it is an important factor in the background screen process.

The cost of using a reputable CRA for your background screening is minimal compared to the cost to your company from hiring an employee who might go on to steal from the company or worse, or from the cost of countering lawsuits from former employees or candidates dismissed or rejected due to information discovered during a background check.

3. Employers should also consider whether the background provider has accreditation with the National Association of Professional Background Screeners (NAPBS)

The National Association of Professional Background Screeners (NAPBS) offers an Accreditation program to background companies in which, much like ISO standards, the company develops and documents their policies and procedures relating to Data Information and Security, Legal Compliance, Client Education, Researcher and Data Standards, Verification Service Standards, and Miscellaneous Business Practices.

The submitted policies and procedures are first reviewed in a desk audit and then by an onsite review by an independent auditor who makes an accreditation recommendation to the Background Screening Credentialing Council of the NAPBS. Accreditation should be considered a minimum selection criterion. Especially considering the risks of litigation as described above, there are a sufficient number of accredited background companies that no employer should risk accepting services from a company who cannot or will not achieve Accreditation. By performing due diligence, you not only protect yourself, but you protect your organization.

4. The CRA follows recommended best practices for using online databases, such as determining whether a reported conviction is that of the applicant and getting current dispositions. The report format is also important to evaluate. The format of reports that CRAs provide to employers should be clear and easy to understand. All charges related to a single incident should be reported as a single entry.

Some Consumer Reporting Agencies offer inexpensive “criminal background checks” based solely on database searches. It is never a good practice to rely on reports based solely on these searches. While they contain useful information, databases are not current and accurate, principally because they are not updated regularly and may not contain all relevant records. Any reliable report must search the records available from the courts in the county and/or state where the candidate resided. Additionally, if federal crimes are considered relevant for the position, the appropriate U.S. District courts should be searched.

5. Litigation history: It has been said that the best predictor of future behavior is past behavior. In evaluating prospective background providers, ask if they have ever been the subject of an FCRA violation investigation by the federal regulator, The Federal Trade Commission (FTC), or the Consumer Financial Protection Bureau (CFPB). Ask if they or any company acquired by them, have ever been or is now involved in litigation regarding an alleged FCRA violation. Once you have the facts, you can determine if you would be at risk with that provider or be best served by a background screening provider with a better record.


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 quality does matter. The wrong decision can be very costly both in monetary terms and in reputational damage. Be prepared to evaluate quality and organizational fit to assess the long term cost of your relationship with a background screening provider. Those who persist in chasing pennies in the selection phase will be feeding dollars to plaintiff’s bar in the future.

It is essential to partner with a reputable and reliable background check and screening service provider who is established and their business ethics align with your organizations. Take your time, ask questions, and spend time doing your due diligence when selecting a credit reporting agency to align with.

Sources: Best Practice Standards: The Proper Use of Criminal Records in Hiring, SHRM, The National Association of Professional Background Screeners (NAPBS)


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