If you operate a car dealership and are currently hiring, you can protect your business, customers, and reputation by conducting thorough background checks on applicants.
At iprospectcheck, we regularly conduct employment background checks for car dealerships across the US.
This guide explains the importance of background checks, common searches dealerships request, and compliance considerations.
Key Takeaways
- Car dealerships should conduct background checks to protect inventory, protect sensitive customer information, reduce liability risks, maintain regulatory and insurance compliance, and prevent damage to their reputations.
- Common background checks dealerships request include criminal history, identity verification, employment verification, education verification, sex offender registry checks, credit history checks, and pre-employment drug tests.
- You can get a car dealership background check by partnering with a trusted provider like iprospectcheck.
Why Auto Dealers Should Conduct Background Checks
1. Protect the Dealership’s Inventory
Auto dealerships have high-value inventory, such as vehicles and expensive parts, that can be at risk of theft or fraud.
Dealerships use background checks to screen out candidates with theft or embezzlement history and protect the company’s inventory.
2. Protect Sensitive Customer Data
Customers must provide sensitive personal identifying information (PII) when they apply to finance or lease a vehicle through a dealership.
You should run background checks before hiring anyone for finance, sales, or management roles at your dealership, since these employees will have access to sensitive customer data.
3. Reduce Liability Risks
Conducting background checks helps dealerships minimize their liability risks.
Background checks can show whether an applicant has a history of unsafe behavior that could increase the risk of harm to coworkers or customers.
4. Maintain Regulatory and Insurance Compliance
Most commercial insurance companies for dealerships require background checks that include motor vehicle records checks for any candidate who will drive as part of their job.
State regulatory bodies might also require background checks on car dealers as a condition of obtaining a dealer’s license.
5. Prevent Damage to the Dealership’s Reputation
Sales associates and finance staff have public-facing roles.
If they engage in misconduct, people may associate their actions with the dealership, causing reputational harm.
Background checks allow you to see whether a potential new hire might have something concerning in their background that could place the dealership’s reputation at risk.
Common Background Checks Requested by Dealerships
Criminal History Check
Most car dealerships ask for criminal history checks, which report the following details about an applicant’s pending charges and/or convictions:
- Criminal case number
- Court jurisdiction
- Arrest or summons date
- Offense type (felony or misdemeanor)
- Offense date
- Disposition
- Disposition date
- Sentence information (when available)
Dealerships ask for criminal history checks for most positions, especially those in sales, finance, and management.
Motor Vehicle Record (MVR) Check
Dealerships hiring for sales associates, porters, and service staff who will drive company or customer vehicles often ask for MVR checks.
These checks reveal the following information about an applicant’s driver’s license and driving history:
- Driver’s license number
- Driver’s license state
- Driver’s full legal name
- Driver’s registered address
- License class
- Issuance and expiration dates
- Traffic infractions
- Major traffic crimes (DUIs, vehicular manslaughter, etc.)
- Suspensions/revocations
Employment Verification
Dealerships ask for employment verification to confirm the claims applicants have made on their applications or resumes.
Employment verification discloses the following information about a candidate’s work history:
- Employers’ names and addresses
- Employment dates with each employer
- Job titles and positions held
Education Verification
Dealerships might ask for education verification for positions that require technical training or certifications, such as mechanics.
This check reports the following information about a candidate’s education:
- Names and addresses of schools attended
- Enrollment dates
- Any certificates, diplomas, or degrees conferred
Credit Report
In states that allow pre-employment credit checks, dealerships might request reports for jobs in finance, accounting, or management.
Pre-employment credit checks are soft pulls that don’t harm a candidate’s credit score and show the following details:
- Candidate’s legal name
- Debt-to-income (DTI) ratio
- Collection accounts
- Payment history
- Bankruptcies (if applicable)
- Other indicators of financial stress/mismanagement
- Available credit
Drug Testing
Some dealerships require pre-employment drug tests as a condition of employment.
These checks depend on drug-free workplace policies and might be required by the dealership’s insurance policy.
Pre-employment drug tests check for an applicant’s recent use of illicit substances.
Sex Offender Registry Search
Auto dealerships might request sex offender registry searches to protect their employees and customers.
A sex offender registry search shows the following details for candidates who are registered sex offenders:
- Offender’s legal name and aliases
- Physical descriptors
- Registered address
- Jurisdiction in which the offender is registered
Identity Verification
Identity verification is a preliminary search performed by CRAs to verify a candidate’s identity and confirm the records found belong to them and not to someone with a similar name.
This check reports the following information:
- Applicant’s full legal name and aliases
- Date of birth
- Address history
CRAs can use this information to find out which other states the applicant has lived or worked in and include those in their background search.
Know Before You Hire
How to Run Background Checks on Automotive Industry Employees
1. Create a Background Check Policy
Before you begin conducting background checks, you should create a comprehensive policy for your dealership that complies with federal, state, and local laws.
List the types of searches your background checks will include based on the duties of different jobs.
Provide the specific steps your hiring staff should take before, during, and after running background checks.
2. Train Your Hiring Staff
Train your hiring staff on your policy and the applicable laws and regulations.
Provide a hiring checklist to reduce the chance of errors.
3. Partner With a Reputable Screening Provider
Choose a reliable background check company, like iprospectcheck, that’s experienced with the automotive sector.
We help dealerships and service centers stay compliant with fast, accurate reports that comply with federal, state, and local laws.
4. Follow Notice and Consent Requirements
Before you initiate a background check, you must provide a written disclosure that your dealership conducts background checks.
This notice must be on a standalone form.
You must also obtain a candidate’s written consent before the background check can begin.
5. Time Your Checks Strategically
Whether or not your state or local government has a ban-the-box law, it’s smart to wait until after you’ve selected a couple of finalists or until you’ve made a conditional job offer to perform a background check.
This helps save time and money by avoiding background checks on candidates who won’t be hired.
6. Review the Report Carefully
When your background checks come back, review the results carefully.
If you’re satisfied, contact the candidate to schedule onboarding and a start date.
If you have concerns, move on to the next steps.
7. Evaluate Convictions Fairly
When you learn that a candidate has a criminal conviction, don’t treat it as an automatic bar to employment.
Instead, review the conviction as it relates to workplace safety and the position’s duties before you decide not to hire them based on that information.
8. Complete Adverse Action Steps (If Needed)
If you decide not to hire someone based on the results of their background check, you must complete the steps of the FCRA’s adverse action process:
- Send a pre-adverse action notice and enclose a copy of the report that includes the information you’re concerned about and a copy of the form “A Summary of Your Rights Under the FCRA”.
- Give the candidate a reasonable chance to respond, which is generally considered to be five business days. The candidate can provide evidence that the information is wrong or that they’ve rehabilitated.
- If you make a final decision not to hire, send a final adverse action notice and include a copy of the candidate’s rights under the FCRA and any relevant state laws.
Important Laws and Regulations
Federal Laws
Fair Credit Reporting Act (FCRA)
The FCRA protects consumer privacy for the information that consumer reporting agencies (CRAs) collect and report about them.
This includes the information that background check providers gather and report to employers about applicants and employees.
Under this law’s seven-year reporting restriction, CRAs can’t report the following information older than seven years for jobs paying less than $75,000 annually:
- Arrests that didn’t lead to convictions
- Civil lawsuits and judgments
- Debt collection accounts
- Paid tax liens
- Chapter 13 bankruptcies (CRAs can report Chapter 7 bankruptcies for 10 years)
The FCRA doesn’t restrict CRAs from reporting other information, including convictions and employment history, that might be older than seven years.
For dealerships, the FCRA also requires them to disclose to candidates that they conduct background checks on a separate form that doesn’t include information about anything else.
They must also obtain a candidate’s written authorization before performing a background check.
Employers must also comply with the FCRA’s adverse action process when they want to deny employment based on information learned through a background check before making a final decision.
Title VII of the Civil Rights Act of 1964
As the leading anti-discrimination law, Title VII applies to background checks when employers learn about criminal convictions and want to deny employment based on that information.
When you learn about an applicant’s criminal conviction on a background check, you must individually assess it as it relates to the job’s duties and workplace safety before deciding not to hire the applicant because of the conviction.
State and Local Laws
State and local laws vary widely. To learn about your requirements, check with legal counsel about the laws that apply where you operate.
Here are a few to watch for:
Ban-the-Box Laws
Many state and local governments have passed ban-the-box laws.
These laws control when you can perform criminal background checks or inquire about criminal history.
Credit History Check Laws
Some states restrict employers from checking an applicant’s credit history unless the employer meets an exception.
You’ll want to find out whether your state has a credit history restriction in place before performing a credit check on an applicant or employee.
Social Media Privacy Laws
Many states have social media privacy laws that prohibit employers from doing the following things:
- Asking for an applicant’s or employee’s social media account password or username
- Requiring or asking an applicant or employee to add a supervisor to their contact lists
- Asking an applicant or employee to open their social media accounts in the employer’s presence
Social media privacy laws typically don’t prohibit employers from viewing publicly available social media information, however.
Know Before You Hire
iprospectcheck: Your Trusted Partner for Fast, Reliable Car Dealership Background Checks
As a dealership, performing employment background checks helps you confirm that your new hires are competent, safe, and qualified for their jobs.
iprospectcheck performs background checks for dealerships and service centers in every US state and territory and has extensive knowledge about the industry and its needs.
To learn about our background checks and receive a free quote, contact us today: (888) 509-1979.
DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.
FAQs
How long do dealership background checks take?
How long a dealership background check will take depends on the requested searches.
In general, a standard background check with iprospectcheck will take from 1 to 3 business days.
What can disqualify a candidate from working at a dealership?
A candidate might be disqualified from working at a dealership based on the following details learned through a background check:
- Certain criminal convictions – Not all criminal convictions will disqualify an applicant. However, a dealership might turn down a candidate based on a conviction for fraud or theft, sexual offenses, or violent crimes to protect the safety of their employees and customers and minimize their risk of loss.
- Inaccurate employment history – Some applicants lie about their previous employment, including fudging employment dates to hide gaps or claiming to have held positions with more authority than they had. Many employers turn down applicants when employment verification reveals they misrepresented their employment history on their resumes or in interviews.
- Poor driving record – Dealerships might turn down applicants with poor driving records because of an inability to insure them. For example, a car salesman who must take potential customers on test drives might be denied employment because of excessively high points, a suspended license, or a history of DUIs.
- Failed drug test – Dealerships that condition employment on a pre-employment drug test may turn down applicants who test positive for one or more illicit substances.
How far back do car dealership background checks go?
How far back a background check might go depends on state and federal law.
The FCRA’s seven-year rule may apply to dealership background checks for jobs paying less than $75,000.
This rule prohibits CRAs from reporting the following information when it’s seven or more years old for jobs paying less than the salary threshold:
- Arrests not leading to convictions
- Civil lawsuits/judgments
- Paid tax liens
- Chapter 13 bankruptcies (10 years for Chapter 7)
- Debt collection accounts
The seven-year rule doesn’t apply to other information, including employment verification, that might be relevant.
Some states also have laws that restrict the reporting of convictions older than a specified time.
Many dealerships ask for three to five years of information.
Do dealerships run background checks on customers?
Yes, dealerships may run cursory background checks on customers, but they’re not the same as employment background checks.
When you apply for financing with a dealership, they’ll check your credit history and verify your employment.
This is to ensure you have enough income to make your car payments and have good enough credit to reduce the dealership’s risk.
If you’re trying to qualify for a lease, the dealership might check your motor vehicle records (MVR).
Finally, people applying to purchase high-end cars might undergo a basic criminal background check to look for fraud and other indicators of risk.
How can I check my own background before applying to work at a car dealership?
To understand what a dealership will see when it performs a pre-employment background check, you can run a personal background check on yourself with a reputable provider like iprospectcheck.
We offer employer-quality personal background checks for an affordable price.
