Background Checks - In-House vs Outsourced

Background Checks - In-House vs Outsourced

Key Differences between In-House and Outsourced Background Checks

If you or your company perform background checks for Employment Screening or Tenant Screening purposes, it is important to decide whether in-house or outsourced background checks are right for you.

First, what is the difference between in-house versus outsourced background screening?

In-house background checks is when a landlord, realtor, or employer individually searches sources for background checks. A common example of this would be a landlord calling a tenant applicant’s employer to verify the applicant’s position and wage/salary. Another instance of an in-house background check would be a hiring manager visiting a county courthouse’s databases to search for records under an employee applicant’s name.

Outsourced background checks is when a landlord, realtor, or employer hires a third-party background check company to take care of their background checks. Typically this third-party is either a Consumer Reporting Agency (CRA) such as AAA Credit Screening Services, or a “Reseller” that purchases its background reports from a CRA. Processes vary from company to company, but in the case of AAA Credit Screening Services, the landlord, realtor, or employer (“client”) sends in a request along with the individual’s application and/or authorization form(s), specifying the scope and type of background check that they would like, such as a Nationwide Criminal Search or a Worker’s Compensation Report. From there, AAA Credit Screening Services procures the report information and returns it to the client requestor.

The main arguments for and against in-house and outsourcing background checks are as follows:

In-House Background Checks

Pros:

• In-House Background checks do not have to conform to the Fair Credit Reporting Act (FCRA), meaning they can include searches for information going beyond seven (7) years of history

• No service fee, other than those charged by the sources (e.g. courthouse record clerks, high school registrar’s offices)

Cons:

• Scope is limited to what the landlord/realtor/employer can do on their own, without the use of CRAs or Resellers. Usually this means visiting county courthouses and police departments for criminal records or contacting the applicant’s references left on their resume or application. Some counties do not have online or phone access to court or police records.

• Background screening is a time-consuming process, especially for those who are not in the background screening industry. A single applicant’s background check can take hours of work; for a human resources worker paid the industry average of $62,960/annually, in-house background screening can be a waste of company time and resources.

Outsourced Background Checks

Pros:

• Third-party background check companies typically have a wide scope of searches. AAA Credit Screening Services, for example, is able to perform criminal background checks at the county, state, or nationwide level. Additionally, AAA Credit Screening can obtain criminal records from foreign countries, something that is simply impossible for most individual landlords, realtors, or employers performing in-house background screening. AAA Credit Screening also has access to certain searches that are not available to most individuals, such as Social Security Number Verifications or Business Credit Reports.

• Time and resources used on background checks are limited to the amount of time spent ordering the report and the cost of the report as purchased from the third-party background screening company. A client can purchase a Statewide Criminal Report from AAA Credit Screening and have the report turnaround in one business hour, or spend weeks of time and hundreds of dollars on court access fees, trying to search the county courthouses within the state for criminal records.

Cons:

• Individuals must careful with the company they chose to perform their background checks. CRAs and Resellers who do not hold a membership with the Professional Background Screening Association (PBSA) may be unreliable, or not conforming to industry standards, leaving clients with low-quality, unfinished, or falsified reports.

• Third-party background check companies must conform to the guidelines set forth by the Fair Credit Reporting Act (FCRA). This means that on most searches, CRAs and Resellers can only return 7 years’ worth of history. The FCRA also requires that the client’s permissible purpose (such as tenancy, employment, extension of credit, or insurance underwriting) for background screening be determined by the CRA or Reseller before any background screening can occur. Additionally, the FCRA mandates that all consumer reports (that is, credit or background screening reports on individuals) must be authorized by the consumer, that is, the individual whose background is being reported, in writing.