Background-check Industry Under Scrutiny as Profits Soar

Few companies are growing as fast as Sterling Infosystems Inc., one of the largest players in the criminal background-check business. Its revenue has rocketed to nearly $250 million from just $7.5 million in 2001, an annual growth rate of 34%-1 percentage point more than Apple’s over the same period. However, sometimes Sterling costs people their jobs by getting it wrong, by turning up background information that is simply incorrect. Be that as it may, Sterling has never been subject to any government action and has a litigation-incidence rate of 0.0005%. Founder and Chief Executive Billy Greenblatt, says that performing checks is “not a perfect science” and that “nothing is guaranteed.” But critics say that accuracy can be purchased for a price and that profit making companies like Sterling don’t want to spend what it takes to ensure that accuracy. Critics also argue that automation is the industry’s biggest problem because the databases that background-check companies rely on are frequently incomplete. Greenblatt disagrees saying, “whenever you use a human being, you have more risk than if you automate,” he said. “We care more than anyone in the world about getting information right.”

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