The Trojan Horse of Background Screening: Data Suppliers Who Compete with CRAs

Note: This is part of a blog series about the critical role a background screening data provider plays in the success of your organization and the importance of thoroughly evaluating key areas of your potential partners. In this blog, Nick Fishman, InformData’s Chief Marketing Officer, shares his insights on increasing examples of the supply chain competing with CRAs.

Stop me if you’ve experienced this. You’re pitching a large account on a high-volume background screening deal only to find out that the supplier you will use to fulfill that contract is going direct and attempting to win the same deal. It could be any product— Credit Reports, I-9, Healthcare Sanctions, Substance Abuse Screening, etc. And all of a sudden, you’re out in the cold.

Scenarios like these have been occurring with background screening companies for as long as I can remember and while the small suppliers can face devastating consequences for cutting CRAs out of the equation, larger vendors tend to shrug and say they won’t do it again (until they do).

Generally, these instances have been isolated to the non-core products CRAs offer (see the aforementioned list). However, as the industry has grown and more sophisticated investors have entered the market, the lines on the core products, such as criminal background checks, are also becoming blurry. For instance, those in the supply chain position themselves as data providers but also own CRAs. Private equity firms who own CRAs are buying data providers. And if you had concerns about the non-core products, well, you can’t be thrilled about this development.

In a recent InformData study of nationwide criminal record suppliers, we found that 50% of the top providers either directly owned or were affiliated with a CRA.

Now that I’ve captured your attention, maybe you’re already asking yourselves the following questions.

• Is your money inadvertently fueling your next competitor?
• Could the supplier be using the data and intel you provide to learn how to compete in the market?
• Is your supplier poaching your customers?
• Is the supplier undercutting their prices to their affiliated CRA to win business?
• Is the supplier raising your prices to give themselves an unfair advantage in the marketplace?

Before we go further, let me unequivocally state that InformData is your partner, not your competitor. Unlike some wholesalers, we do not own, nor are we or our investment partners affiliated with any CRA. Our sole focus is to understand and service the needs of CRAs like you, which is why we’re laser-focused on what you value most: delivering the highest quality data at speed with competitive pricing… and we’ve tailored our entire operation to help you excel in these areas.

Our commitment runs deep. We’ve spent decades investing in our nationwide Direct-Source-Data® methodology. By removing unnecessary layers between CRAs and the information they need, we optimize efficiency, enable scalability, and increase reliability. This, along with our API-first integrations and simplified business models, empowers CRAs to achieve peak competitiveness and profitability while exceeding your customer's expectations.

But it’s not just about the data. We're passionate about improving the lives of our customers and the background screening industry at large. We tackle industry challenges, offer actionable advice, and keep you informed. We’re dedicated to being an exceptional partner, providing you with the data you need, when and how you need it.

Evaluate Your Provider

Now that we’ve established this conflict of interest, it is important for you to evaluate your supply chain to determine where you might be exposed. Ask your providers if they own or are owned by or otherwise affiliated with a CRA. If they are owned by private equity, determine whether that group has CRAs in their portfolio of companies.

We all know that competition in the background screening space is fierce. Why should you have to worry about your data providers joining the fray?

That's a wrap on our How to Evaluate Your Data Provider blog series. To check out the full collection of blogs, check out the links in the Stay Tuned for More section in the original article. If you have questions about any of the information we've shared, don't hesitate to contact us to discuss further. As your trusted industry partner, we're happy to help in any way we can.