background checks

How to Know if Your Background Check Vendor is Putting Your Company at Risk

Background checks are an essential part of any business’ hiring process, helping to assure workplace safety and reduce potential liability. Especially for companies who make a lot of hires or have a large number of safety-sensitive positions, outsourcing background checks to a reputable vendor saves time and money while ensuring that the screening process is conducted in a professional manner. What too many businesses don’t discover until it’s too late, however, is that some background check vendors aren’t as reputable as they may seem at first blush. 

The wrong background check vendor can put your company at serious risk of negligent hiring lawsuits, not to mention cost you the time and expense necessary to find a new vendor and restart the hiring process. In order to avoid these potential pitfalls, it’s critical for a company to hire the right employment screening vendor the first time. Conducting your own background check on potential third-party vendors can help your organization avoid a lot of hassle in the future.

The first mistake many HR departments make when hiring a background checking company is basing their decision on price alone. While prices will always be a consideration, the accuracy, compliance, and timeliness of the background checks you’ll be receiving are of paramount importance. For this reason, it is typically necessary to dig a little deeper into a vendor’s business before signing a contract. If you have already hired a background check vendor, it is never too late to start asking questions.

In order to verify the potential risk your preferred employment screening service provider may be bringing to the table, ensure that the vendor can provide proof of the following:

  • Proof of insurance: Hiring a non-insured background check company can cause issues if damages or lawsuits occur.
  • Better Business Bureau membership: Confirm the vendor’s status with the BBB, as doing so accounts for their reliability and confirms responsiveness to customer complaints.
  • State license requirement: Verify that the vendor has an updated and current license. Refusal of a license may be due to previous wrongdoings.
  • Affiliation with the affiliated with the National Association of Professional Background Screeners (NAPBS): NAPBS requires its members to stay informed on changing legislation and industry best practices.
  • Evidence of Fair Credit Reporting Act lawsuits or other legal issues: A vendor with no history of legal issues can show that the company follows all regulations and conducts safe business.

Why are background check vendors named in lawsuits?


Occasionally, a third-party background check company will be named in a lawsuit. These suits can be the result of noncompliance by the screening agency or the employer with whom the agency was contracted. If a candidate is denied employment due to the results of a background check and the employer does not follow the adverse action rules of the FCRA, the candidate may choose to pursue a lawsuit. The employer and/or background screening company may be named in the lawsuit.

Lawsuits may be filed due to the following reasons: 

  • The applicant was unaware they were being screened. He or she did not see or sign a written consent form notifying them of the background check. Oftentimes, the form is hidden in the application when it should be a completely separate form.
  • The applicant didn't receive a copy of their report. As part of their FCRA rights, the applicant should receive a copy of their background check so they can dispute inaccuracies, especially if they are denied employment.
  • The information on the background check was wrong. It could be a case of mistaken identity, false information (especially as related to criminal convictions) or inaccurate data.

 When researching a background check company, hiring managers should be aware of the questions to ask to make sure they are hiring (or continuing to employ) a credible partner. If you have concerns about your background check provider, let the vendor know beforehand that you will be conducting a background check of your own. An accredited, experienced third-party screening company will provide transparency regarding their reliable, secure, and compliant policies and procedures during the hiring process. Being upfront about your due diligence can prove your seriousness about hiring the right vendor and allow for vendors to remove themselves from your potential list if they refrain from the process. 

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