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Choosing a Background Check Service: A Buying Guide for Businesses

Businesses of all sizes are increasingly conducting background checks as part of their hiring process. But choosing the right background check service can be confusing. Our guide will help you understand the difference between the two different types of background check services and determine which is best for you.

The first question you need to ask yourself is what kind of background check service you want to use. There are two distinct types:

  • Full-service background check companies: These organizations do all of the investigation work for you.
  • DIY background check websites: These websites allow you to conduct searches on your own and provide instant results.

Here are more details on each.

  • Employment background check companies offer a comprehensive screening solution.
  • After providing the name of the job candidate you are investigating, the company does all of the work for you. Its representatives check for criminal convictions and verify past employment and education, as well as any other details you request.
  • The specific details employment background check services can screen for include:
    • Misdemeanor and felony criminal records at the county, state and national levels
    • Sex-offender status
    • Social security number trace and validation
    • Employment verification
    • Education verification
    • Professional license verification
    • Reference checks
    • Credit checks
    • Civil record checks
    • Motor vehicle records check
    • Military records verification
    • Workers' compensation history
    • Address history
  • These companies abide by the Fair Credit Reporting Act (FCRA), which governs how background checks must be conducted. This includes getting the job candidate's consent to conduct the search before it is started and giving that person the opportunity to review the report when it's completed. Many full-service providers handle all of these tasks for the employer.
  • Most companies use an online portal that allows employers to request background checks and review finished reports from anywhere that uses an Internet connection.
  • Full-service companies typically charge between $50 and $100 per report and take between two and five days to complete the search process.

Pros and cons: The biggest benefit of using these companies is that they comply with FCRA laws. Using services that don't follow these laws makes your business vulnerable to potential lawsuits and fines. Another advantage is that these companies conduct thorough searches that don't solely rely on looking through online databases for information. Many of these companies employ court runners to make in-person visits to courthouses to gain more information on any red flags that are raised. Full-service companies also contact former universities and employers to confirm previous education and work history. The biggest downsides of these services are the cost and time they take to complete.

What the experts say: In addition to providing a much higher level of professionalism and integrity than online search engines, full-service background check companies also conduct much more thorough searches, said Mike Aitken, vice president of government affairs for the Society for Human Resource Management.

"Outside entities not only, in most cases, do electronic searches, they also go right to the source," Aitken told Business News Daily. "They actually do research and [personally] search the jurisdictions for those particular instances."

Editor’s Note: Looking for a background check service? Fill out the form below to get free quotes from our vendor partners.

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Our best picks include three full-service background check services (good for employee background checks) and one online background check service. For full reviews of less expensive, DIY online background check services, visit our sister site, TopTenReviews. See box below to understand the difference.

 

Credit: Anita Rahman

Ready to choose a background check service? Here's a breakdown of our complete coverage:

  • Online background check websites are simple and cheap to use.
  • All you need to do is visit the online site and type in the name of the person you are searching for. You are then instantly provided with a variety of details, including:
    • Misdemeanor and felony convictions
    • Sex offenses
    • Details on arrests and plea deals
    • Bankruptcies
    • Civil legal judgments
    • Address history
    • Marriage records
    • Social security number verification
    • Social network profiles
  • The majority of DIY websites are not FCRA-compliant and have specific language in their "terms of use" that they are not to be used for pre-employment screening.
  • Costs run between $10 and $50 depending on how much information you want to look at.

Pros and cons: The biggest advantages of these websites are that they provide instant results for a very low cost. Additionally, they also allow you to do the searching on your own. The downsides are that they are not FCRA-compliant, often provide incomplete or error-filled results and don't include education or employment verification services.

What the experts say: Sean Bigley, an attorney whose law practice focuses entirely on background investigation issues, said businesses that use do-it-yourself websites for pre-employment background checks should do so at their own risk.

"It is worth noting that much of the information on these websites is wildly inaccurate, thereby limiting the utility of the process anyway," Bigley said. "Given the wealth of information available on these websites, I can also foresee claims of age or race discrimination."

Now that you know the basics, you might be ready to make some decisions. If so, check out our best picks for background checks.

Still not sure if you even need to conduct background checks or which type of service is right for you? Here are some questions and answers that might help you come to a decision.

Q. Why should I conduct pre-employment background checks?

A. Businesses that don't use background checks when hiring new employees are putting themselves at risk. When a new employee who hasn't been properly vetted is hired, employers are basically welcoming a stranger into their business.

"That stranger has access to your customers, your cash, your IT — everything," said Lester Rosen, founder and CEO of Employment Screening Resources. "It would make as much sense to do that as it would to walk down the street and give the keys to [your] front door to a total stranger just because when you talk to that stranger, they look good or sound good."

Q. Background checks seem more useful to large businesses. Do small businesses need to be conducting background checks?

A. Small businesses have just as much, if not more, to lose from a bad hire. Bringing in someone with a criminal past who steals from the company or puts the employee's co-workers in danger could end up putting a small organization out of business for good.

A recent study from HireRight, a pre-employment screening firm, found that 73 percent of small businesses are now conducting background checks when making new hires.

Q. Does conducting background checks send a message to potential hires that you don't trust your employees?

A. Conducting background checks doesn't mean you are assuming everyone who applies for a job at your business is a bad person.

"The idea is that, as they used to say in politics, 'You want to trust, but verify,'" Rosen said. "You want to hire based on information, as well as instinct."

Q. Do background checks give any insight into what type of employee the candidate will be?

A. While a simple background check might not tell you how hard of a worker a job candidate will be, it can give you some insight into their character by providing you with an idea of how much you can trust them.

"It can be a red flag to the employer if the person is being less than honest [on their resume or job application]," Aitken said.

Q. How often do businesses actually find a red flag when conducting a background check?

A. The HireRight study revealed that 86 percent of employers have found applicants who lied or misrepresented themselves on their resume or application.

Q. If a background check turns up a criminal record on a potential candidate, can you immediately eliminate that person from consideration?

A. Mark Briggs, of the Arizona-based Briggs Law Group, said that in order to disqualify a candidate from consideration because of a criminal history, employers must have a clear connection for why someone's criminal record makes him or her unfit for the job for which they are applying.

"For example, having five speeding tickets in the past two years may be a valid reason to not hire a delivery driver, but their misdemeanor vandalism conviction 10 years ago probably is not," Briggs said. "If the employer has inappropriately relied on something like an arrest report to deny an applicant a job, they can be in big trouble." 

Q. What is the purpose of running a credit check on a potential employee?

A. Credit checks can provide an overall financial picture of a candidate. However, they should only be considered for those applying for roles in which they would handle large amounts of money or assets, such as a chief financial officer, according to Aitken.

"They aren't trying to play 'gotcha' and say, 'They fell behind once or twice on their credit card payment or have an outstanding student loan debt,'" Aitken said of why a credit check would be conducted. "It is to check their overall ability to meet their financial obligations."

Q. Why is it important to make the background screening process easy on job candidates?

A. In today's market, where competition is fierce for quality employees, you don't want to turn off potential hires by having a complicated screening process, according to Trindade.

"It is hard to find quality talent to fill your positions," Trindade said. "You want them to have the best experience and [know] that you aren't making them jump through any unnecessary hoops."

Q. With social media being so popular, shouldn't part of the background check include examining job candidates' social network accounts?

A. Although employers might be tempted to check out a candidate's Facebook or Instagram page in order to learn more about his or her judgment and character, they could be opening themselves up to lawsuits by doing so.

"An employer might learn from a person's Facebook page that they belong to a particular religious group or have a disability that is not visually apparent," Briggs said. "Knowing that information can open up an employer to liability, because they are not allowed to ask about those things in an application or interview for a job, and once you know something, you can be accused of considering that information illegally when making the hiring decision."

Q. What penalties do you face if you don't follow the FCRA background screening laws?

A. The two biggest negative consequences of not following the laws are being sued by a job applicant or employee, and being investigated and possibly fined by a government agency, such as the Equal Employment Opportunity Commission or National Labor Relations Board.

"Defending against a government investigation or lawsuit is time-consuming and expensive," Briggs said.

Q. Is spending money on a full-service background check company really worth the investment, when I could just as easily do an online search on my own for a fraction of the cost?

A. There is great danger in just a haphazard online search, Aitken said. The information you come across might not be accurate or complete. In addition, the information might not be relevant to the job. Making hiring decisions based on those factors could come back to hurt you in the long run.

"Yes, there is a cost, but there are ways to structure that to make it more affordable," Aitken said. "This is just part of the investment into making a good hire."

Q. What should I be looking for in a full-service background check provider?

A. The experts we spoke with said the most important questions to ask when choosing an employment-screening company are:

  • Does it have the ability to find all of the information your business needs to make your hiring decisions?
  • Does the service comply with and understand the Fair Credit Reporting Act?
  • Are the costs reasonable?
  • Does the service provide you with the necessary authorization forms for job candidates to fill out?
  • How long does it take to get results?
  • Does it provide clear, accurate and complete written reports?
  • Is the company accredited by the National Association of Professional Background Screeners?

Now that you know more about background check service, you need to determine which provider is best for you. To help you narrow down your choices, we would encourage you to check out our best picks for various types of businesses, as well as our complete vendor list, if those suggested picks don't fit your needs. A roundup of our best picks, our reasoning for choosing each one and our thorough background check provider list can be found on our Best Picks Roundup page.

Editor’s Note: Looking for a background check service? Fill out the form below to get free quotes from our vendor partners.

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For a summary of our best background check service and website picks and to review our methodology for choosing them, visit our best picks page here.

Chad  Brooks
Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.