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Background Check Industry Has Changed Much in Years from 2000 to 2010

February 01, 2011 posted by Steve Brownstein

By Thomas Ahearn

With the year 2011 now upon us, the time seems right to look back at how much the background check industry has changed since the year 2000.

In slightly over a decade, background checks have gone from a luxury to a necessity, from a primarily  government run endeavor to a substantial private sector business with a large number of firms providing service, and from a mostly expensive time and labor consuming task to, in some cases, a totally automated paperless solution.

Factors behind the increased use of background checks include in large part to the shocking terrorist attacks that unfolded on September 11, 2001 as well  as publicized incidents of workplace violence, multi-million dollar negligent hiring verdicts, a sharp rise in cases of resume fraud including some well publicized examples of fake degrees, and a national awareness of the dangers to children and other vulnerable groups when unqualified or dangerous persons are allowed access to them.

Below are comparisons of background checks in 2000 and 2010 in six critical areas that have changed in the industry:

1. Number of employers performing background checks:

2000: An estimated 50 percent of companies conduct background checks on their employees according to the 1996 SHRM Workplace Violence Survey.

2010: A series of recent surveys from SHRM reveals that approximately three out of four U.S. businesses perform some type of background check as part of their pre-employment screening programs, with 76 percent conducting reference background checks and 73 percent conducting criminal background checks.

2. Industry standards for background checks:

Many changes have occurred with respect to background screening industry standards in the years between 2000 and 2010.

2000: There is no national trade association, industry standards, or definitive publications on background screening.

Steven Brownstein, Publisher of the Background Investigator, holds the first ever background check industry conferences in Long Beach, California and then larger events in Tampa, Florida.

2003: As a result of the Tampa conferences, momentum builds for a professional trade association for the background screening industry. ESR President Lester Rosen serves as the chairperson of the steering committee that founded NAPBS and serves as the first co-chair. NAPBS seeks to “…promote ethical business practices, promote compliance with the Fair Credit Reporting Act and foster awareness of issues related to consumer protection and privacy rights within the background screening industry. The Association provides relevant programs and training aimed at empowering members to better serve clients and to maintain standards of excellence in the background screening industry.”

2004: ‘The Safe Hiring Manual – The Complete Guide to Keeping Criminals, Terrorists, and Imposters Out of Your Workplace’ by ESR President Lester Rosen is published, the first comprehensive book on employment screening.

2010: NAPBS launches the Background Screening Agency Accreditation Program (BSAAP) for a singular background check industry standard representing a background check company’s commitment to excellence, accountability, and professionalism.

To become accredited, a background check company must pass a rigorous audit of its policies and procedures as they relate to six critical areas of the BSAAP: Consumer Protection, Legal Compliance, Client Education, Product Standards, Service Standards, and General Business Practices.

3. Sources for background check information:

2000: Background check information is mostly limited to traditional sources such as criminal records, driving records, verifications, and reference checks.

2010: With the advent of new technology like the Internet in general – and new media such as blogs, videos on YouTube, and social networking sites like Facebook in particular – there are many more potential outlets from which employers may gather information about job applicants.

4. The need for international background checks:

2000: Before the rise of outsourcing, much of the workforce is perceived to have lived, worked, and been educated inside of the United States, so the idea of international background checks for job applicants seems expensive and unnecessary to most companies. There are also limited resources available for such background checks.

2010: According to recent U.S. government statistics, there are 38.5 million foreign-born U.S. residents representing 12.5 percent of the population, more than 1.1 million persons became Legal Permanent Residents (LPRs) of the United States in 2009, and the unauthorized immigrant population living in the U.S. reached an estimated 10.8 million in January 2009 and grew 27 percent between 2000 and 2009.

Given these facts, U.S. companies must be prepared to perform international background checks on job applicants with global backgrounds.

5. Compliance issues concerning background checks:

2000: Background check companies must comply with the federal Fair Credit Reporting Act (FCRA), originally passed in 1970, that regulates the collection, dissemination, and use of consumer information and is enforced by the Federal Trade Commission (FTC).

2010: Background screening has become an intensely legally regulated endeavor. Background check companies must comply with a myriad of industry regulations in addition to FCRA requirements such as the Fair And Accurate Credit Transaction Act (FACT Act) of 2003 (which amended the FCRA), Sarbanes-Oxley, the Patriot Act, E-Verify employment eligibility verification, Equal Employment Opportunity Commission (EEOC) discrimination issues against protected classes pertaining to the use of criminal records and credit reports for employment purposes, and new consumer data privacy protections regulations such as “Safe Harbor” and privacy laws that protect the Personally Identifiable Information (PII) of consumers.

Another source of intense legal regulations are state laws regulating credit reports and criminal records. Many states have their own version of the FCRA.

6. Technology used in background screening:

2000: Most employers are required to fax orders to a background check firm. The idea of entering orders into an online system or making information available online is only in the beginning stages.

2010: Technology in the background check industry has increased substantially, with the use of online processes to not only enter orders but to have paperless systems with electronic signatures and integration into Applicant Tracking Systems (ATS) so background checks can be ordered with the click of a mouse.

With the advent of Web 2.0, employers may expect to see more advances in the technology for the background screening process.

The downside, however, is that Internet entrepreneurs have seized upon background checks as a way to make quick money and in some instances are playing off the fears of Americans by offering cheap and instant checks that are based upon databases never intended to be a substitute for a background check.