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Faulty Background Checks Blamed on Digitized Records, Greedy Amateurs

Whoever said that living in the past is a fruitless endeavor never tried to make money off background checks.

Billions of publicly-available records have resulted in a global army of unskilled, wanna-be detectives who make quick bucks by peddling information obtained from public databases related to arrests, criminal convictions and credit reports.

The industry is mainly supported by employers, which spend at least $2 billion annually on background checks to determine if job applicants have a past history of criminal behavior or substance abuse. Over 90% of employers now conduct background checks, which means big business for companies that provide such services. Just one major provider, LexisNexis, reportedly conducts over 12 million background checks a year.

According to an investigation by the Associated Press (AP), however, the lucrative business of providing background checks has been weakened not only by the incompetence of amateur information peddlers but also by what spawned the growth of the industry: the digital conversion of public documents.

Personal data gleaned from court systems nationwide by automated computer programs is delivered to buyers unverified. And in a volatile economic climate, not only are reputations being destroyed by the cutthroat background check industry, but people are being denied work opportunities for which they’re desperate.

People like Kathleen Ann Casey of Massachusetts.

Casey had been without a job for two years, and her unemployment benefits had run out. She was on the verge of homelessness when a Boston drugstore offered her a position as a pharmacy technician paying $11 an hour. All she had to do was pass a criminal background screening.

The background check, conducted by a company called First Advantage, turned up a 14-count criminal indictment that indicated Casey had been charged with larceny for forging checks, using fake credit cards and scamming an elderly couple.

As it turned out, First Advantage had the wrong Kathleen Casey – one who lived in a different city and was 18 years younger. Oops.

“It knocked my legs out from under me,” said the real Casey, who just wanted a job as a pharmacy tech. Due to the incorrect background information she didn’t get the position.

Eventually, she found temporary work to sustain herself until she settled a lawsuit against First Advantage – something that victims of inaccurate background checks are doing in increasing numbers.

Illinois resident Samuel M. Jackson filed suit after a company called InfoTrack provided background check results that included information about three other people with the same name – all of whom had convictions for sex crimes, including rape and aggravated sexual battery. Jackson was white; the other three people with criminal records who shared his name were black.

“He had a background check company that ran a background report that was grossly inaccurate. Almost laughably so if it wasn’t so outrageous,” said his attorney, Chris Wilmes. “He had a background check report that suggested he was a serious, serious sex offender and that he had committed crimes that merited life in prison.” InfoTrack settled Jackson’s suit for $35,000 and agreed to correct his data.

The Associated Press reviewed thousands of pages of court documents and interviewed dozens of court officials, data providers, attorneys, regulators and victims of faulty background checks. The problems uncovered by the AP were clearly systemic, and all were related to the digitization of public records.

Twenty years ago, court clerks physically added a piece of paper to a file to update someone’s criminal record. And anyone who wanted to read about a person’s criminal past had to go to the courthouse to review the material.

Today, however, half the courts in the U.S. make records available on public websites.
Federal civil and criminal records are available online via Public Access to Court Electronic Records (PACER). Privacy laws require courts to redact some information, such as birth dates and social security numbers. But, according to the AP, the widespread digitization of billions of public documents results in errors.

“There’s very little human judgment,” stated Sharon Dietrich, an attorney with Community Legal Services in Philadelphia, who represents victims of faulty background checks. “[The industry] doesn’t seem to have much incentive to get it right.”

Companies that compile information using public databases – many of them mom-and-pop operations with limited resources – are the biggest (but not the only) culprits. Their automated software programs misinterpret information, or, as Casey learned, assign records to the wrong people based on a common name. In other cases, inaccurate background information can result from identity theft.

Further, companies often fail to update their databases after an offender’s criminal charges have been removed from the public record; for example, due to an acquittal, expungement or reversal of a conviction on appeal. The same problems apply to non-criminal records, such as credit reports and job histories.

Some of the largest companies perpetuate errors, too. Thomson West, CourtTrax, CoreLogic, SafeRent and five other background information providers had their licenses revoked in North Carolina for repeatedly distributing incorrect information or failing to download criminal record updates to ensure accuracy.

Yet the hard data on background check errors isn’t public, and most of the leading companies contacted by the AP for its investigation wouldn’t disclose how many of their records need to be corrected each year.

Mike Cool, a vice president of data wholesaler Axciom, told the Associated Press that fear of litigation usually keeps the number of errors to a minimum. “The system works well if everyone stays compliant,” he said.

But a December 2011 class-action settlement with HireRight Solutions, one of the industry’s largest companies, revealed the magnitude of the problem. HireRight agreed to pay $28,375,000 in damages and attorneys’ fees to almost 700,000 people for alleged background check violations from 2004 to 2010. The damage awards ranged from as little as $15 to $20,000. See: Ryals v. HireRight Solutions, Inc., U.S.D.C. (E.D. Vir.), Case No. 3:09-cv-00625-JAG-DWD.

Fault also lies with states that have decided to profit off digitized public records. Arizona, for example, charges $3,000 for a bundle of discs containing all of its criminal files – as well as data that isn’t available on public websites, such as driver’s license numbers and partial social security numbers. For a fee of around $81, Tennessee provides a CD that contains the names, addresses and birthdates of all citizens with handgun carry permits.

Other states are proceeding more carefully. New Mexico considered selling its public records in bulk, but decided not to because the state didn’t have a surefire way to enforce updates. And errors became so overwhelming that North Carolina decided to stop selling its criminal records in bulk. Virginia also stopped offering wholesale subscriptions to its public records.

Still, many other states, including Wisconsin, are mostly concerned with protecting the sale of their lucrative databases, according to Jeff Myer of Legal Action of Wisconsin.

“It’s a big moneymaker, and that’s what it’s all about,” he said. “The convenience of online information is so seductive that the record-keepers have stopped thinking about its inaccuracy. As valuable as I find public information that’s available over the Internet, I don’t think people have a full appreciation of the dark side.”

Part of the problem with the “dark side” of backgrounds checks is that there is little illumination of that aspect of the industry. Some providers, however, have at least acknowledged there are problems. The Diligentia Group, which offers “comprehensive background investigations, due diligence investigations and legal investigation services,” cites a number of problems with background checks, including errors in public databases and reporting incorrect information due to common names.

In response to shortcomings in the background check industry, an Illinois law prohibits employers from asking about job applicants’ credit histories; additionally, dozens of cities have banned questions related to a potential employee’s past criminal record – part of the “ban the box” movement. The EEOC recently issued guidance to employers on the use of criminal backgrounds checks, to avoid discriminatory results. [See: PLN, June 2012, p.20; Sept. 2011, p.32].

Tighter regulation of background check businesses by government watchdog agencies would help, too. In August 2012, for the first time ever, the Federal Trade Commission (FTC) charged a background screening company with violating the Fair Credit Reporting Act, which requires accuracy in consumer reports, including criminal record and credit checks. The company guilty of the violations? HireRight Solutions, which agreed to pay $2.6 million in penalties and change its business practices.

The FTC had contended that HireRight – like many other background check companies – “failed to take reasonable steps to ensure that the information in the reports was current and reflected updates, such as the expungement of criminal records.”

Sources: Associated Press,,, New York Times,,

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Related legal case

Ryals v. HireRight Solutions, Inc.