Businesses worldwide have seen the need for pre-employment background screening and are now doing these searches as a routine part of their hiring process. However, shutting the door on potentially harmful employees has now opened the door to a new realm of litigation and court battles.
With a revolving door of compliance lawsuits that seems to just keep on spinning, it is more important than ever to make sure that before a background screening provider vets your potential employees, you must first vet the market for the right provider who adheres to responsible hiring practices recommended by the EEOC and follows the guidelines of the FCRA.
Partnering with a background screening company is an investment to insure your business against the economic disturbances caused by poor hiring decisions. With any investment, you expect to see a return benefit, but what many companies are seeing instead is the inside of a courtroom. So what is the root cause of screening partnerships costing your business potentially millions in damages? One word: noncompliance.
Noncompliance to the strict rules and regulations of the background screening industry can really cost your business. Your time and money are too important to waste being bogged down in the mire of expensive litigation, so it is critical to find the right provider who will actually save you money, not exhaust you of it. The potential harm of having the wrong provider is seen all throughout the industry today. Grocery store chain Whole Foods has settled a class action lawsuit for about $800,000 after not properly informing applicants that they would be undergoing background investigations. Home Depot recently settled a class action lawsuit for $1.8 million for violating the FCRA by not having proper background check forms for the applicants. One of the top banking and financial companies is fighting a $12 million lawsuit for an FCRA violation caused by a noncompliant background investigation which violated pre-adverse action notifications. As you can see from only a few examples, should your business find itself on the wrong end of one of these kinds of lawsuits, your ROI is going to take a serious blow.
You can get a glimpse into the kind of quality that a background screening provider will give you if you take a look at the lawsuits that they themselves are fighting. One of the “top” background screening providers is fighting a $4.75 million dollar lawsuit for an FCRA violation in which they reported outdated information on an applicant which resulted in a loss of employment. This same provider is defending another class action suit when they reportedly failed to provide applicants with consumer reports prior to taking adverse action. Two other major credit reporting agencies have recently been named in a lawsuit in which they violated the FCRA by listing inaccurate data. Other major players in the industry are facing lawsuits for a number of noncompliance issues such as failing to reinvestigate a disputed report, illegally reporting race, and failing to provide notices that help applicants correct mistakes.
When it comes to background screening, ‘cheaper’ or ‘bigger’ does not mean ‘better.’ Unfortunately this fallacy has cost many businesses millions of dollars. While a low price tag is appealing, the allure is gone once inevitable litigation rears its costly head and you are left to pay for the damages.
Many background screening providers have the rhetoric of being compliant, but few have the record of being compliant. The top three consumer reporting agencies are currently defending over 200 separate lawsuits and regulatory complaints. That is not the kind of stability and trust you want from a business partner, especially since the whole reason you pay for pre-employment screening is to protect your company from these kinds of situations.
A trusted partner should not treat their services as a caveat emptor. In order to have peace of mind, a provider should have confidence in meeting all compliance requirements by providing client indemnification for any non-compliant processes in your contracts. When choosing a provider, look for a CRA who has never had a complaint filed against it with the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), or any other state/federal regulatory agency. The best protection for your company would come from a CRA who has an unblemished history for never having a judgment against it in connection with the performance of a background investigation and never had a Class Action lawsuit—something that has become commonplace in the screening industry.
Compliance can be ensured in a number of ways, one of which is finding a provider who is accredited by the NAPBS, adhering to specific requirements governing business processes and controls specific to the background screening industry. NAPBS accreditation requires an independent audit with demonstrated compliance against program standards relating to legal compliance, consumer protection, quality and accuracy, and more. Accreditation ensures that a company’s background screening services are completed with the highest level of compliance and accuracy, using industry best practices. Not surprisingly, only a small percentage of all employment screening companies are accredited by NAPBS.
CARCO is one such company who meets all of these requirements, making us the right investment for any business. CARCO is one of a select group of background screening companies that has received NAPBS accreditation and puts compliance at the forefront of every screen we do, which in turn protects your business from any needless litigation. The ‘return on investment’ that top competitors provide instead ends up being a ‘return to court’ for you and your company. When other CRAs claim to be compliant to lawful regulations, history shows they instead are defiant. With CARCO as your partner we make sure that threats are mitigated, not accentuated.