Criminal background screening is ripe for major disruption. Oscore has a unique opportunity to rapidly and aggressively take control of the industry due to:
Lack of market concentration – Not one company holds 5% of market share.
Inept business models – Inaccurate or Archaic.
Businesses face continued litigation – hundreds of millions paid out to thousands in class action lawsuits.
Two types of business models exist and each is pathetic.
- Rapid low cost screening utilizes depositories of large aggregators that have faulty data and not updated. Resulting in most of the industry’s large number of lawsuits.
- Accurate but archaic method of utilizing individuals across the country to manually retrieve records. This system is much more expensive and time consuming. Human error is a major issue and thee companies also experience their own share of lawsuits.
Over the last few years, employers and background check companies have paid out more than $325 million to settle related litigation.
Oscore provides accurate data in near-real time mirroring state databases and judicial depositories.
Oscore provides the credit report free of charge with a purchase of a $7 Oscore. (Think of the impact CreditKarma and their free credit report has had on the credit bureaus. CreditKarma was acquired this past December for $7.2B by Intuit.)
Oscore does NOT include Dismissed, Not Guilty, Sealed or Expunged cases.
Industry Facts
Market Size: $2.8bn (measured by revenue)
Companies: 2,414
Issues:
Accuracy
Cost
Time
Lawsuits, Lawsuits, Lawsuits
Market Share Concentration:
The Background Check Services industry in the US has low market share concentration and there are no companies with more than 5% market share.
In 2020, the three largest operators are expected to account for less than 10.0% of industry revenue, indicating a low level of market share concentration…
List Of BEST KEY PLAYERS in Background Check Market Report
- PeopleConnect
- Inteligator
- TazWorks
- GoodHire
- Orange Tree Employment Screening
- Spokeo
- Sterling Infosystems
- BeenVerified
- TruthFinder
- First Aduvatage
- Instant Checkmate
- PeopleFinders
- Checkr
- HireRight
- Krol
- ADP
The problems are industry-wide.
There are no licensing requirements for criminal background screening companies. Anyone with a computer and access to records can start a business; an industry analysis estimated there were over 2,000 background screening companies in 2019.
There is no central system for registration for background screening companies. A consumer can’t regularly order their own report to review for errors as there is no central source to find and request a copy.
Many companies attempt to skirt the federal Fair Credit Reporting Act (FCRA), including by subcontracting work to vendors or disclaiming responsibility.
Employers often fail to comply with the FCRA. This makes it difficult to know whether consumers were denied employment due to a background check report.
Many screening products are now designed to automate and outsource decision making to the background screening company. Employers and landlords may no longer individually assess or make judgment calls about applicants. And applicants who otherwise would have been accepted are excluded, and employers and landlords miss out on qualified employees and tenants.
NCLC’s research reveals that criminal background screening companies continue to generate reports that:
- Mismatch the subject of the report with another person (e.g., listing criminal records belonging to someone else, often harming consumers with common names in particular);
- Include sealed or expunged records (e.g., listing a conviction that was legally removed from the public record);
- Omit information about how the case was resolved (e.g., failing to report that charges were dismissed);
- Contain misleading information (e.g., listing a single charge multiple times); and/or
- Misclassify the offense reported (e.g., reporting a misdemeanor as a felony).
Many errors are due to common poor practices by background screening companies, such as:
- Using over-inclusive or unsophisticated matching criteria;
- Failing to verify information obtained through vendors or other faulty sources;
- Using incomplete data (e.g., missing personal identifiers or disposition information);
- Retrieving data in bulk and then failing to routinely update the database;
- Failing to utilize all available information to prevent a false positive match;
- Misunderstanding state-specific criminal justice procedures and laws.
Companies forced to pay settlements in the millions.
Logos
AT&T, Costco, FedEx, Home Depot, K-Mart, Publix Super Markets, Sephora and Whole Foods, Amazon, Target, Uber and Wells Fargo, FedEx, Macy’s, NY Life Insurance Company, Food Lion, BMW, Johnson and Johnson, Dollar Tree
Amazon in 2018 resolved claims it violated disclosure and authorization requirements under the FCRA with a $5 million settlement, distributed among a class of 454,000 job applicants in the form of gift cards worth up to $150.
Wells Fargo ultimately agreed to settle the class action to which Manuel belonged for $12 million.
Intellicorp Records, which agreed to an $18.6 million settlement covering more than 100,000 litigants who alleged it provided employers with incorrect, outdated or incomplete information on prospective employees.
In December of 2019, a federal judge in Pennsylvania gave final approval for a settlement of a class action lawsuit for $562,500 against a “company accused of providing prospective employers with inaccurate criminal background checks,
. In August of 2019, a CRA reached a $3.3 million settlement in a lawsuit that claimed the CRA did not ensure the accuracy of the consumer reports it maintained as required by the FCRA.
On December 3, 2020, a class action lawsuit was filed in federal court that claimed the background check process of New York Life Insurance Company that allegedly denied jobs due to past arrests not resulting in convictions was discriminatory and disproportionately harmed Black job applicants, ClassAction.org reported.
On December 8, 2020, a tenant screening company that provides background check reports to property management companies agreed to pay $4.25 million as part of a settlement with the Federal Trade Commission (FTC) over allegations the firm failed to follow reasonable procedures to ensure the accuracy of its reports about potential tenants in violation of the FCRA, according to a press release from the FTC.
On March 12, 2021, a lawsuit was filed against FedEx by a job applicant who claimed the delivery company violated New York City’s Fair Chance Act (FCA) that protects people with criminal records from discrimination “when it checked his criminal history before deciding whether to offer him a job,” Bloomberg News reported.
The job applicant consented to a background check when applying for a job at FedEx and never heard from them after receiving the results. Under the FCA, “companies are prohibited from considering or inquiring about the criminal history of applicants until after they extend conditional job offers,” according to Bloomberg News.
In 2020, Macy’s – one of the largest American retailers – reached an agreement in a lawsuit brought under the Title VII of the Civil Rights Act of 1964 and the FCA of the New York City Human Rights Law (NYCHRL) that sought to address criminal background
On December 3, 2020, a class action lawsuit was filed in federal court that claimed the background check process of New York Life Insurance Company that allegedly denied jobs due to past arrests not resulting in convictions was discriminatory and disproportionately harmed Black job applicants,
A background screening company featured in the article was ordered to pay $28.4 million in a class-action lawsuit to settle allegations of improper notification of background checks and non-compliant dispute processes.
Another background screening company agreed to pay $20.7 million in a class-action settlement for a non-compliant contemporaneous notice process and a non-compliant dispute procedure. The company failed to send contemporaneous notice for criminal database “hits” to the consumer “at the time” of the employer’s review of the criminal records. By the time consumers received the contemporaneous notice; they had already been fired or not hired due to the negative results provided to their employer.
The trend of companies being sued for FCRA violations committed by staffing agencies seems to be picking up. The latest victim to face such a lawsuit is the well-known cosmetic brand Johnson & Johnson. In December 2015, J&J was sued along with the staffing agency Kelly Services.
The second staffing agency to settle a class action is Infinity Staffing Solutions Inc. The lawsuit was initially filed by John Giddens – a former applicant with Infinity Staffing. The lawsuit alleged that the staffing company committed FCRA violations by forcing applicants to sign a waiver of rights, while authorizing background checks.
The lawsuit turned into a class action on behalf of everyone who had applied for employment with Infinity Staffing solutions from Dec. 6, 2011 through Aug. 21, 2015. In October 2015, Infinity Staffing Solutions Inc agreed to settle the class action, rather than go through the trial process.
The amount which Infinity Staffing will pay to settle the class action is yet to be revealed. Negotiations are still going on. However, employers who have settled similar class actions (i.e. for embedding a waiver in their background authorization forms) have paid varying amounts. For instance, Whole Foods Inc paid 803,000 but Dollar Tree paid $4.08 million. As soon as the figures are released, we shall update this page.
The trend of companies being sued for FCRA violations committed by staffing agencies seems to be picking up. The latest victim to face such a lawsuit is the well-known cosmetic brand Johnson & Johnson. In December 2015, J&J was sued along with the staffing agency Kelly Services.
Yet another staffing agency has felt the financial pinch of improper background checks. This time it is the turn of Industrial Staffing Services Inc. (ISSI). This New Jersey – based company recently agreed to pay nearly $60,000 to settle a Fair Credit Reporting Act (FCRA) class action lawsuit.
Over the last few years, employers have made huge payouts to settle FCRA lawsuits. Examples include Publix Supermarkets ($6.8 million), Food Lion ($3 million) and BMW ($1.6 million), among others.
“When dealing with public records, often you may just have a first and last name, and possibly an address, and the credit bureaus and background check companies won’t always insist on an exact match,” Singer said.
“Ten years ago we didn’t see nearly as many; now, in every walk of life, there is a background check required for hiring and also feedback reviews. We sue background-check companies every day,” Mailman said.
“Too many background screeners make mistakes that create havoc in the lives of people applying for jobs and housing,” said Sally Friedman, Legal Action Center’s Legal Director. “With these class actions, we are not only targeting companies that do background checks; we are also showing that employers and landlords cannot simply hand off to third parties the task of background screening. They can’t turn a blind eye to whether the reports are accurate, and the process is fair and legal.”
On December 3, 2020, a class action lawsuit was filed in federal court that claimed the background check process of New York Life Insurance Company that allegedly denied jobs due to past arrests not resulting in convictions was discriminatory and disproportionately harmed Black job applicants, ClassAction.org reported.
In addition, the complaint stated that “in 2018 Black individuals made up 15% of the population of New York State, but 38% of those arrested and 45% of those arrested for felonies. In contrast, white individuals made up 55% of the population of New York State, but only 33% of arrests and only 27% of felony arrests.”