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Why Instant Background Checks Can Get You In Hot Water

January 26, 2016


January 26, 2016

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Original Post: 1-26-16
Updated Post: 5-4-16
Updated Post: 7-22-16

Many websites provide so-called “online instant background checks.” For some employers, this seems like a good proposition.

After all, critical positions need to be filled fast, and if applicants perform extremely well in interviews, a recruiter will want to make a decision promptly. In such scenarios, conducting online instant background checks seems the best idea.

However, their perceived advantages notwithstanding, online instant background checks are a bad idea. In fact, they are basically a ticking legal time-bomb. They can easily backfire, and leave an organization in a multitude of legal problems. Here is a summary of the main reasons why the online “instant” background checks are not a great idea.

  • Adverse records are not vetted for accuracy
  • They use limited sources of information
  • They may return incomplete records
  • They often return erroneous background information
  • They lead to hasty hiring decisions
  • They can open up an organization to lawsuits

Let’s take a deeper look at each of the following pitfalls of online “Instant” searches:

1. Adverse Records are not Vetted for Accuracy

Crimcheck offers a National Criminal Database search, however it is not “instant” because of the fact that every adverse record that is returned in the search is verified with the original source of the record.  In other words, if a National Criminal Database (NCD) search provides a criminal record result, before returning that record to our client, Crimcheck verifies the record with the court. 

Online instant background checks will return all information that is found to the requester, leaving the employer to wonder if the record is accurate or not.  An NCD search is a good add-on service to add to your basic county search because it can cast a wider search net for criminal records, however the results have to be verified for accuracy.

2. Limited Sources of Information

The major weakness of instant checks is that they can only access limited sources of public records. The only sources of information which they can access are the ones contained in digitized databases. Not all jurisdictions in all states have digitized records. Many courts do not sell their public record information or make it available in an “instant search” form.

There are a few databases which can actually be accessed almost instantly. Examples include the National Sex Offender Registry and Departments of Motor Vehicles in most states. Also, a Social Security Number Trace and Validation can be conducted within one business day.

However, there are certain critical sources of information which cannot be accessed on an instant basis. Examples include courts where an in-person search of the public access terminal is required in order to obtain criminal records. This requires boots on the ground and many courts still have this requirement. Similarly, when conducting an education or employment verification, there is no guarantee that inquires will be returned instantly. In most cases, such inquiries require at least 2 to 3 business days.

Additionally, most instant records databases contain criminal conviction data which may be stale, not updated, or not suitable for pre-employment purposes, such as arrests, expunged records, and criminal or civil records that exceed some state standards of a seven year search scope.

3. Incomplete Records

Instant searches almost always return incomplete information that requires further research. If an instant search returns a criminal record, how can we know that the record is accurate and up to date?  Most have not been updated by the database provider since the time the record was initially purchased. Many instant databases only update their records from the courts on a monthly, or bi-annual basis.

4. Erroneous Background Information

Instant checks can also return erroneous background information, because they do not provide enough matching identifiers. For instance, they can return criminal convictions for people with similar names. This is actually a common occurrence – and a common source of  background check lawsuits.

Most lawsuits actually begin when adverse action is taken on the basis of erroneous criminal records. A case in point is the Delhaize America class action which the company ended up paying $3 million to settle. The lawsuit began with a background check on an applicant which returned a false felony conviction.

Now, returning erroneous information isn’t limited to instant checks. Any background check or court record can return false records. Just like toddlers sometimes end up on the No Fly List for having names similar to that of a terrorist, people with names similar to convicted felons sometimes have criminal records returned on their background checks. This is the reason that the FCRA requires adverse action notices – to give the applicant time to dispute inaccurate information.

The problem with instant checks is that there is no time for verification. Most employment screening companies vet their information by verifying criminal information via the courts. With instant database checks, the time for such vetting isn’t there.

This increases the likelihood of organizations getting background check reports with erroneous information. The only problem is that the reports don’t come with a caveat stating that the information wasn’t vetted, and could therefore be erroneous. When decisions are made on the basis of such erroneous information, lawsuits inevitably follow.

Update 5-4-16

Background Check Company Sued Over Inaccurate Report

In a case which perfectly illustrates the pitfalls of instant checks, a background check vendor has been slapped with another class action lawsuit. The vendor, S2Verify, is being sued for providing inaccurate background check reports.

The case arose when Regmon Hawkins, an ex-drug addict, applied for a security guard position with the IPC Corporation. IPC contracted S2Verify to conduct a background check on Mr. Hawkins.

Now, during his stint as a drug addict, Hawkins had committed some petty crimes. He had been arrested on numerous occasions, and not convicted. On one occasion, though, he had been convicted. Even then, at the time of applying for the position with IPC, Hawkins claims that he had been clean for a while.

When S2Verify conducted the background check, it returned numerous criminal records. These records prompted the IPC Corporation to deny Mr. Hawkins a job – thinking him as an ex-convict.

The only problem is that the records returned by S2Verify were actually erroneous. First of all, three of the criminal convictions reported were false. Although arrested on those three occasions, Mr. Hawkins had never been convicted.

Secondly, the single conviction which Mr. Hawkins had was returned several times. Basically, S2Verify made multiple entries of the single conviction in the background check report. This gave the impression that he had been convicted several times – thereby making him appear to have multiple criminal records.

The inaccuracies came to Mr. Hawkins attention when he received a copy of the background check report. Unfortunately, the report arrived after the decision to not hire him had already been made. He had no way to explain the inaccuracies, so he decided to sue S2Verify. His attorney turned the suit into an FCRA class action.

At the first court appearance on January 11th, 2016, S2Verify’s lawyers sought to have the lawsuit dismissed. They argued that their client hadn’t violated the FCRA provisions. The arrests – claimed the lawyers – were accurate, and reporting a single conviction multiple times did not violate FCRA accuracy guidelines.

However, the judge in the federal district court of California disagreed the with defendant’s lawyers. The judge agreed with the plaintiff’s assertion that S2Verify “failed to follow reasonable procedures to assure maximum possible accuracy”. The court, therefore, ruled that the defendant willfully violated the FCRA and the lawsuit can proceed.

The only sad part is that the IPC Corporation hasn’t been exempted from the class action. It is also being sued for taking an adverse action basing on the inaccurate information. Ultimately, it is going to suffer for the sloppiness of the background checking company. The take home for employers is that they need to steer clear of “instant” background checks.

Update 7-22-16

Court Upholds FCRA Lawsuit Against Sears For Revoking Job Offer Based On Erroneous Information

In another case which illustrates the pitfalls of instant background checks, a federal district court in California has upheld a FCRA lawsuit against Sears. The lawsuit was initially filed in May 2015 after Sears revoked a conditional offer of employment made to Harley Milne.

The lawsuit emerged when Harley applied for a position of “Senior Director of eCommerce Operations” at Sears. After going through the interview process, he was made a conditional offer of employment. Basically, the job was his as long as he passed a background check.

Sears then contracted HireRight to conduct a background check. When the results came, they showed numerous irregularities. First of all, Sears claimed that it was unable to verify Harley’s degree. Secondly, the company said that it had uncovered both a felony and misdemeanor in Harley’s background.

Basing on this information, Sears withdrew the offer of employment. The only mistake the company made was not sending Harley a copy of the background check report in time. A company representative simply called Harley to inform him that the offer of employment had been withdrawn. The background check report arrived three days later.

When Harley received the background check result, he immediately saw problems with it. First of all, he contested the claim that his degree cannot be verified. This is because he went to a genuine university. Secondly, he had never been convicted of any misdemeanor, let alone a felony.

Naturally, Harley contacted Sears to complain. However, the company referred him to HireRight. It turned out that HireRight hadn’t even attempted to verify the degree. The background checks company had also failed to verify the accuracy of his so-called convictions.

Unfortunately, this isn’t the first time HireRight has been accused of providing false information. In 2012, the company was fined 2.6 million by the Federal Trade Commission (FTC) for failing to verify its background checks.

In June 2016, the company agreed to settle a lawsuit which accused it of providing inaccurate information.

When Harley contacted HireRight, the company wasn’t responsive. It told him that they did not verify his degree because they only check with “accredited colleges”. They adamantly refused to rescind their erroneous background check report.

This impudence prompted Harley to contact a lawyer. The lawyer brought a lawsuit against both Sears and HireRight. However, Sears was the main defendant. The lawsuit alleged that the company violated the FCRA pre-adverse action notice guidelines.

According to the FCRA, Sears was supposed to have sent a pre-adverse action notice before making a decision to withdraw the conditional offer. The notice should have been sent accompanied by a copy of the background check. The company should have then offered Harley an opportunity to challenge the contents of the report.

Sears’ lawyers initially attempted to get persuade the judge to throw out the case. They argued that the phone call Harley received did not tantamount to an adverse action. This is because the company had only communicated an “intent” to withdraw the conditional offer.

However, the judge wasn’t persuaded with this argument. He countered by pointing out that even if the phone-call did communicate an intent, it should have been made concurrently with a delivery of the background checks report. This is because the pre-adverse action notice guidelines state explicitly that the notice accompanied by a number of documents – one of them being a copy of the background checks report.

Ultimately, Sears may end up paying dearly for blindly trusting the contents of a background check report delivered by a company with a track record of delivering inaccurate reports. The take home for any employer is that the promise of “express background checks” isn’t one they should be wary of.

In A Nutshell…

Online instant background checks may seem advantageous because of a quick turnaround time (and also because they tend to be relatively cheap). However, these seeming advantages are offset by the likelihood of the results being incomplete or inaccurate. When making critical employment decisions, using incomplete or inaccurate information can be catastrophic.

If someone with a criminal record is hired because the online instant check did not reveal the record, an organization can end up with the bad scenario where the person hurts a client, fellow employee or manager.

Alternately, if a potential hire is denied employment or an employee fired because the online instant check returned a false criminal record, the organization can miss out on a great employee. In case the aggrieved individual seeks legal advice, the organization can end up paying millions of dollars in settlements.

The bottom line is that online instant background checks carry too many risks. As such, any organization which desires to make decisions on the basis of accurate information should steer clear of them. Otherwise, by attempting to save hiring time through instant checks, an organization can create a scenario which can ultimately lead to wrong HR decisions, a lawsuit and million dollar settlements.

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