I will start by defining background checks to mean an investigation conducted into the history of an individual. Background checks are most often done in the following contexts: government doing a background check as a condition of employment for professions such as teaching or working for the IRS, private business as a condition of employment, purchasers of corporations who are performing due diligence checks on the corporation's lenders, insurance companies who are investigating a claim, and finally private individuals who are suspicious of other family members, friends, or neighbors for a variety of reasons of which the most common is an individual's love interest.

There has been a dramatic increase in the popularity and usage of background checks. This stems from the increase and fear of workplace violence, terrorism, risks associated with hiring litigious employees and those who commit embezzlement and fraud, abuse of the elderly and children in certain professions, and the low cost and ease at which background checks can now be done over the Internet.

It is a mistake to assume that all background checks are the same. There is a great variety in the kind of background checks available. Low cost background checks for employment can be done over the Internet for $30. A background check on an individual's love interest also costs about $30. Regular employment background checks focus on past litigations, worker's compensation claims, driving record, and criminal convictions and arrests. A more expensive employment background check adds the additional element of drug testing which involves urine analysis, hair, or blood testing. Perhaps the most expensive background check is for a national security position. These background checks cost over $10,000 and include polygraph testing, investigation into an applicant's known associates, and an investigation of previous employers or anything which could subject the client to an increased risk of extortion by a third party.

Major employers have formed an anti-shoplifting database that is used to indicate whether an applicant has ever been accused of dishonesty without actually being charged with a crime. Such a database is controversial and so most people do not even know that this database exists.

Because of recent advances in psychological profiling, many retail and service sector background checks involve a "personality test" to gauge an applicant's work ethic and level of honesty.

Background checks for employment purposes are governed by the Fair Credit Reporting Act (FCRA) and by state regulations. The FCRA mandates that employers get consent from an employee before running a background check. It also gives applicants the right to file an "adverse action" notice if the check is used to deny employment. The FCRA also prohibits employers from relying on criminal conviction information to deny employment unless the conviction specifically relates to the job the applicant is applying for. State laws add further restrictions by prohibiting the use of information that is more than seven years old.

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