Who is checking the background checkers?

John McDonald used to spend hours perfecting his résumé and cover letters before applying for information-technology jobs in his native Boston. But after one potential employer hired a screening agency to investigate his background two years ago, the results have stifled his ambition.

After two weeks of silence from his potential employer, Mr. McDonald pressed the company to let him see his background check report. It stated that he'd failed to disclose an arrest, had used two aliases, and had reported two false employers. McDonald was dumbfounded by all three claims, which he maintains are erroneous.

"I didn't know what to do - still don't," says McDonald about his predicament. "It wasn't a matter of 'I know I'm not going to get [a job],' it was a matter of 'I'm probably not going to get it,' so I have this halfhearted effort."

Over the past several years, background screening has become a boom industry, fueled by increasing concerns about security and legal liability. Some 80 percent of employers now require background checks for all potential employees, according to the Privacy Rights Clearinghouse (PRC), a consumer rights advocacy group in San Diego.

But what if a background check is in error? With little money for legal help, McDonald went to the PRC, whose website provides some assistance free of charge.

"There are many low-level, day-to-day problems that people experience where a lawyer's advice could come in handy," says Tena Friery, the PRC's research director. "Generally, people who have these sorts of problems don't have a lot of money to pay for an attorney."

Industry insiders credit the 9/11 attacks and several high-profile court cases for the growing demand for screeners. One such case involved Boston-based Trusted Health Resources Inc., which went bankrupt after one of its home health aides murdered a patient and his grandmother. In 1998, a jury awarded the patient's family $26.5 million after records showed the caretaker had a criminal record. Today, background screening is a $3 billion industry in the United States.

"There is a much higher level of awareness that doing a background screen is of benefit to the company, clients, its employees, and the person being screened," says Mary Poquette, the cochair of the National Association of Professional Background Screeners. "That's a different view from what we saw even as recently as four years ago."

For many clients, says Ms. Poquette, the numbers speak for themselves. For the first half of this year, 8.3 percent of job applications examined by InfoLink Screening Services in Chattsworth, Calif., revealed some kind of criminal record. (InfoLink merely reports its findings; it does not compare its findings with what someone stated on an application.)

"This is a really amazing figure when you consider that people knew they were going to have a background check," says InfoLink president Barry Nadell. Routine screening of 1,600 volunteers for the Los Angeles County Fair turned up at least three registered sex offenders.

InfoLink's recommended search is four-pronged. First, it checks court records in each county where the job applicant lived, going back at least seven years. Next, the company runs a motor vehicle report, which can uncover convictions the applicant may not have reported. A Social Security number check helps verify the subject's identity, past residences, and possible aliases. The applicant's name may also be run through other records, including incarceration listings, sex-offender lists, and court records.

InfoLink then calls county courts at random to double-check researchers' findings. Depending on the number of applicants and the jurisdiction (court fees vary), Mr. Nadell says a single screening costs from $15 to $50. Those fees can add up, so there's a movement among employers to cut costs, Nadell says. "Some are using strictly databases," he says, "and that's very concerning to our industry because of the inaccuracies that reside in databases. The industry's error rate [among screeners who personally verify database records] is probably less than one in thousands. It's very small."

The most common mistakes, says Nadell, come from sloppy court records and databases.

But as the background-checking industry continues to grow, who screens the screeners? While laws concerning background checks vary from state to state, the federal Fair Credit Reporting Act sets the minimum standard. Under the law, employers must seek the written consent of applicants prior to the screening. And before an employer can reject a potential employee based on his or her background check, the applicant has the right to receive, review, and dispute the findings.

Job applicants also have the right to sue a screening company if errors on a report were the result of negligence.

If the employer uses a background screening company whose disclosure and authorization form for a background check includes a waiver to indemnify the screening company, "that means the company doesn't understand the law," Nadell says. "How do you trust the screening company ... if they won't be responsible for their own negligence?"

Regardless of whether the screening findings were accurate or not, the fact that McDonald was not given the opportunity to review and dispute his background report may mean that his potential employer violated federal law.

"One of the things I didn't know was that it was illegal for them not to provide a copy of my background check," McDonald says. "They said, 'We'll get to it as soon as we can, as soon as someone's available.' And then there were no responses."

McDonald has not found formal employment since that fateful background report. He has chosen to avoid the issue by working as an independent information technology contractor for smaller firms that cannot afford background checks. But with low-paying temporary work, McDonald says clearing his own name seems like a daunting task. "The information out there is vast," he says. "It's kind of hard to come up with large sums of money to do anything."

A study of job applications put through a preemployment screening process reveals that many job-seekers have something they may be reluctant to put on an application. InfoLink, a provider of employment background checks, examined tens of thousands of job applications from January through June. It found that:

41.6% had a violation on record with the Department of Motor Vehicles.

39.2% had bad credit, such as an account that went to a collection agency.

26.4% had discrepancies in their résumés about past employment.

8.3% had a criminal record.

8.2% inaccurately reported their level of education.

3.3% had tested positive for illegal drugs.

Source: InfoLink Screening Services