About 93 percent of employers conduct criminal background checks on some applicants, but not all of them are using reputable agencies to do it, according to a recent report from the National Consumer Law Center (NCLC). 

The report, Broken Records: How Errors by Criminal Background Checking Companies Harm Workers and Businesses, shows that there has been a rapid increase in criminal background checks for job applicants by employers since Sept. 11, 2001, but many of those reports are filled with erroneous information.

"An industry-wide lack of accountability and incentives to cut corners mean that tens of millions of workers may pay for these third-party errors with their jobs while employers waste money and miss out on hiring qualified employees," the report says. 

The report also claims that a high percentage of U.S. adults are affected by background checks, as 93 percent of employers check some applicants, and 73 percent check all applicants, according to a 2010 survey by the Society for Human Resource Management. Nearly one in four adults (an estimated 65 million people) in the U.S. have a criminal record, but many additional people without one are wrongly tagged as having a criminal record.

The NCLC's report reveals that criminal background screening companies' reports routinely mismatch people, which is especially problematic for people with common names; omit crucial information, such as someone was arrested but later found innocent; reveal sealed or expunged information, i.e. juvenile offenses; provide misleading information, such as a single charge listed multiple times; or misclassify offenses, such as calling a misdemeanor a felony.

These problems arise because there is very little regulation for background checking companies, which can practically be started by anyone with a computer, the report says. There are no licensing requirements and no central system for registration, and companies attempt to skirt the Fair Credit Reporting Act (FCRA) by subcontracting work to other vendors or simply fail to comply, the report says.

Because of these issues, consumers cannot regularly check their own reports for errors, and it is difficult to know whether a consumer was denied employment due to a background check report.

Many errors are due to common poor practices by the background screening companies, the report says, such as retrieving information through bulk record dissemination and failing to update databases; failing to verify subcontracted information; using unsophisticated matching criteria; failing to use all information to prevent false positive matches; and lacking understanding about state specific criminal justice procedures.