Beware the Source of your Criminal Background Checks

Guest Editorial

Over the past year, many financial institutions, including banks, credit unions and automobile lending institutions have been working diligently with service providers to assure compliance. One issue that these entities have been addressing is the need for employers to properly screen and conduct criminal background checks on all employees.

It is of utmost importance that we get familiar with and understand what constitutes a proper background check and that these searches be conducted in compliance with federal regulations. The Fair Credit Reporting Act (FCRA) has specific laws and procedures that must be followed. Employee background checks are also known as consumer reports. They include information from various sources, including criminal records and credit reports.

Using consumer reports to make hiring decision, or to evaluate someone for a promotion or retention, requires an employer to fully comply with the FCRA – Fair Credit Reporting Act, which is enforced by the FTC-Federal Trade Commission. Employers are also required to comply with the Equal Employment Opportunity Commission –EEOC.

Many employers in our industry, not familiar with criminal background checks, may be utilizing websites or private detectives to provide these reports. In most cases these reports do not comply with federal regulation and will put the employer at a high risk.

Simply having a signed authorization form from an employee no longer makes you compliant under the law.

Besides a signed authorization, employers must know how to comply with Pre-Adverse Action Procedures, Adverse Action Procedures, and Notice of Negative Public Records.

The following is taken directly from the FCRA website:

If Employers Don’t Comply with the FCRA

There are legal consequences for employers who don’t comply with the FCRA, whether they fail to get an applicant’s okay before getting a copy of their credit or other background report, fail to provide the appropriate disclosures in a timely way, or fail to provide adverse action notices to unsuccessful job applicants. If you think an employer has violated the FCRA, report it to the FTC, because the law allows the FTC, other federal agencies, and states to sue employers who don’t comply with the law’s provisions. The FCRA also allows people to sue employers in state or federal court for certain violations.

On August 8, 2012 the Federal Trade Commission announced a settlement agreement with HireRight Solutions, Inc. The company failed to comply with the FCRA procedures associated with background reports. The FTC proposed consent order imposed a 2.6 million dollar penalty to HireRight. It is extremely important that we, as employers, utilize properly trained companies that specialize in employee background screening and provide the service under the strict guidelines of the FCRA. The National Association of Professional Background Screeners (NAPBS) is a good place to start.

In ending I will say that our industry has entered an era driven by compliance. As employers, we need to not only protect our companies and our clients, but to do so within the federal guidelines. So when your friends offer to run criminal reports at discounted prices, for employment related purposes, because they have access to

popular investigative sites, BEWARE. The violations and consequences are clearly spelled out in the Fair Credit Reporting Act.

Refer to:

§ 616. Civil liability for willful noncompliance [15 U.S.C. § 1681n]

§ 617. Civil liability for negligent noncompliance [15 U.S.C. § 1681o]




Max Pineiro,


NJ Licensed Private Detective

Elite Collateral Recovery, Inc.

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1 thought on “Beware the Source of your Criminal Background Checks

  1. Max is 100% correct in his statements there are obligations set forth in the FCRA placed on any employer who runs a background on an employee for the purpose of employment or retention. The FCRA has no regard for where the data comes from be it an investigation agency or a firm specializing in background investigations. The only way to avoid this obligation would be for your agency to run the background investigation yourself and solely for your own use. To clarify Max’s statement… The FCRA defines a “CONSUMER REPORT” as (603.(d)(1)) “In general. The term “Consumer Report” means any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or part for the purposeof serving as a factor in establishing the consumers eligibility for (B) employment purposes; or…
    The FCRA defines a “CONSUMER REPORTING AGENCY”as (603(3)(f)”The term “consumer reporting agency” means any person which for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole orin partin the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties,and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
    “In order for the entity to be a consumer reporting agency as defined by the FCRA, there are four key factors which must be satisfied by the entity: 1) it acts in exchange for compensation of the kinds described; 2) it regularly assembles or evaluates information on consumers; 3)its purpose in doing so is to furnish consumer reports to third parties; and 4) it uses interstate commerce in the preperation or furnishing a consumer report.” As is evident anyone furnishing dats is considered a CRA and YOU then as the receiver must comply with the FCRA requirements if you use the report for any “ADVERSE ACTION”.

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