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Why CRAs in Pre-employment Background Screening Tell Their Wholesalers That We Don't Pay You For you
Why CRAs in Pre-employment Background Screening Tell Their Wholesalers That We Don't Pay You For your Clears. We pay You For Your Hits.
This statement highlights a common business model and value proposition within the pre-employment background screening industry, particularly from the perspective of Consumer Reporting Agencies (CRAs) when dealing with their wholesalers (often refer to as data providers, public record researchers, or specialized service providers).
Here's a breakdown of what that statement means and why it's a key message:
"We don't pay you for your Clears. We pay you for your Hits."
"Clears" (No Records Found / No Hits):
When a background check is performed, and no adverse information (e.g., criminal records, past addresses, employment discrepancies) is found, the result is considered a "clear."
From the CRA's perspective, a "clear" report, while important for accuracy, doesn't require as much effort, investigation, or validation from their wholesalers. It's essentially a confirmation of absence.
Many parts of the background screening process are automated or yield quick "clears" through database searches. These often have lower costs associated with them.
"Hits" (Records Found / Adverse Information):
A "hit" occurs when the background check uncovers relevant information, such as a criminal record, a different address than provided, or a discrepancy in employment history.
These "hits" are where the true value and complexity for the wholesaler come in. When a potential "hit" is identified through initial searches, the wholesaler's job often involves:
-Manual Research: Going to courthouses, contacting previous employers, or digging deeper into specific databases.
-Verification: Confirming the accuracy and completeness of the record. This includes ensuring it matches the subject (not just a common name) and verifying the disposition of a case.
-Adjudication Support: Providing the detailed, accurate information that the CRA needs to present to their client for adjudication (i.e., making a hiring decision based on the findings, in compliance with regulations like the FCRA).
-Dispute Resolution: Providing accurate data that can withstand a potential dispute from the applicant.
Why CRAs Emphasize This:
-Value for Effort: CRAs are essentially telling their wholesalers: "Your real value to us isn't just running a search that happens to be clear. Your value is in the detailed, accurate, and often manual work involved in verifying and reporting actual adverse findings."
-Cost Structure: Wholesalers often bill CRAs based on the type of search and whether a "hit" requires additional research. The manual intervention, court fees, and time spent on verifying a "hit" are significantly more expensive than simply reporting a "clear." By saying "we pay you for your hits," the CRA is often referring to the higher, more complex, and research-intensive fees associated with adverse findings.
-Risk Mitigation: A "hit" needs to be meticulously accurate and legally compliant. Errors on a "clear" report are less impactful than errors on a "hit" report, which could lead to legal challenges for the CRA or their client. Therefore, the higher payment for "hits" reflects the higher level of expertise, due diligence, and risk mitigation expected from the wholesaler.
-Focus on Actionable Data: Employers hire CRAs to provide them with information that helps them make informed hiring decisions and mitigate risk. While "clears" are good news, "hits" are the critical data points that require careful review and often lead to further action or consideration. The payment structure incentivizes the wholesaler to be exceptionally diligent when a "hit" is identified.
In essence, the statement reflects that the CRAs view the detailed, verified, and legally sound reporting of adverse information as the premium service they are willing to pay top dollar for from their wholesalers, distinguishing it from the more routine processing of "clear" results.
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