The federal government has historically paid little attention to the companies that collect and sell the data used by employers in hiring decisions — including data about an applicant’s criminal history.
But because 9 in 10 employers now use criminal background checks for some applicants, and the data are not always reliable, the Federal Trade Commission and the Consumer Financial Protection Bureau, which share jurisdiction, need to get a better handle on an industry that has grown so fast over the last 20 years that no one can say how many companies there are.
They must make sure that the reporting companies obey the Fair Credit Reporting Act, which requires them to strive for accuracy. The law also requires the companies that furnish reports drawn from public records for employment purposes to notify the people named in the reports in a timely manner — so that any inaccuracies in the data can be challenged — or ensure that the public record is complete and up to date.
Sloppy reporting was not a huge problem in the past when there were fewer companies gathering data and the only way to get it was to examine court records in person. But, in recent years, this has become a computer-driven industry, with companies buying often incomplete records in bulk from the courts or from other screening companies and then not updating them. An incomplete report might show, for instance, that a job candidate was charged with a crime but not that he was exonerated. And faulty data can circulate forever.
A study issued in April by the National Consumer Law Center, an advocacy group, points to many other problems. Background reports often list the same offense many times, making it appear as if the applicant has an extensive record. Worse still, companies sometimes fail to do the basic checking necessary to distinguish among different people who have the same name.