Part 3 of 4: Are Instant Criminal Background Checks Compliant with the Fair Credit Reporting Act?

In part 3 of 4 of our series on Employment Screening, we address the topic of "instant background checks".

While the Fair Credit Reporting Act (FCRA) does not explicitly address instant search results provided by databases, recent penalties imposed by the Consumer Financial Protection Bureau (CFPB) has answered this question clearly; instant searches alone are not compliant with the FCRA.  If you use background checks to help you make business decisions, it’s important that both you and your background check provider remain in compliance with the FCRA.  If you do not comply with the FCRA, you are exposing your business to significant and avoidable litigation risk.  

Global Backgrounds takes extra care to ensure the results we report are accurate and deliver only the facts to our clients.  We augment our database searches with physical docket searches in the county or federal courthouse where the case was adjudicated, and then match the records using multiple identifiers to ensure the accuracy of our reporting.

FCRA Accuracy Standards

Let’s look at the relevant section of the FCRA text in order to better understand the standard that consumer reporting agencies (CRA’s) are held to when reporting a consumer’s background.

Section § 607(b) Accuracy of report.

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

Furthermore, when it comes to what could be considered adverse records for employment purposes:

Section § 613 (a)(2) Public record information for employment purposes.

Maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.

The FCRA’s definition of what is “reasonable” is left to the interpretation of CRA’s.  To many CRA’s, a reasonable procedure to ensure the accuracy of the records they report is simply matching the first name and last name on the applicant and the record.  This can be due to the fact that the database from which they are capturing the record either doesn’t have any more detailed subject information to match or the matching algorithm isn’t capable of matching multiple identifiers.   

If this is the criteria used for matching criminal records to applicants, the potential of false positive results is significant.  According to Ancestry.com, below are the most popular first name and last name combinations:

  1. James Smith: 38,313
  2. Michael Smith: 34,810
  3. Robert Smith: 34,269
  4. Maria Garcia: 32,092
  5. David Smith: 31,294
  6. Maria Rodriguez: 30,507
  7. Mary Smith: 28,692
  8. Maria Hernandez: 27,836
  9. Maria Martinez: 26,956
  10. James Johnson: 26,850

If only first name and last name are used as the criteria for matching an applicant to a criminal record, how accurate could a background check be?  The answer is not very and the penalties are significant! 

Penalty for Inaccurate Reporting

In October 2015, the Consumer Financial Protection Bureau (CFPB), an enforcement agency created by the Dodd-Frank Act in 2010, penalized two CRA’s a total of $13,000,000 for FCRA non-compliance.  Specifically, the penalties focused on the company’s poor procedures to ensure the accuracy of the records they reported to clients.

The infractions and required corrective action cited by the CFPB are clear indications that instant results provided by databases, and matched on first name, last name basis are not compliant with the FCRA and that further effort is required by CRA’s to be considered “reasonable”.  As evidence of this, the CFPB found that “…between 2010 and 2014, nearly 70 percent of criminal history disputes consumers filed with GIS resulted in some change or correction to the information in the consumer’s background report.”

Excerpt from the CFPB’s Findings and Conclusions:

9. Since at least July 21, 2011, Respondents failed to meet the requirements of the section 607(b). 15 U.S.C § 1681e(b).

10. In particular, Respondents failed to have written procedures for researching public records information for consumers with common names or who use nicknames

11. Instead, Respondents allowed its employees to use their discretion in determining whether a record match consumers with common names and nicknames.

12. Further, GIS permits, but does not require, employers to provide middle names for applicants for purposes of matching criminal records to consumers. 

13. These procedures resulted in the reporting of mismatched criminal record information about consumers.

The corrective action prescribed by the CFPB below, requires additional identifiers be used to match the records. 

46(b)(1) Using matching logic and algorithms appropriate to the nature, complexity, and size of the Respondents’ activities and designed to assure maximum possible accuracy of the information reported, including, at a minimum, …matching an applicant’s first name, last name and social security number to affirmatively match criminal records with the same first, middle and last names with one or more additional personal identifiers, such as date of birth or social security number…

Why Global Backgrounds is Different

Global Backgrounds takes a very different approach than many of our competitors when it comes to matching an applicant to a record.  Instead of relying on just a first and last name to match a record, we look for three different identification matches, such as 1) full name 2) date of birth 3) social security number or 4) address.  Taking this approach enables us to report our findings with confidence and deliver accurate data to our clients, enabling them to make decisions based on facts.  Furthermore, in cases where names are common or the data doesn’t quite line up, we take an extra step to physically validate the records. 

If you’re paying for information from a background check vendor, you expect accurate reports based on facts.  If a high volume of your applicants are challenging the results of their background check, then it’s time to take a hard look at the quality of your vendor’s processes.  If you’re unsatisfied, I am confident that you will be satisfied by the quality of the reporting that Global Backgrounds can provide.