Background Check Definition: What Is It and What Is Allowed?
In an era where resumes are polished with AI, certificates are digitally enhanced, and teams are recruited remotely, gut feeling is often not enough. We are experiencing a silent epidemic of deception: studies show that up to 77% of all companies regularly receive fake resumes. But what exactly helps against that?
In this article, we not only clarify the Background Check Definition but also look behind the scenes. We'll show you why modern background checks have nothing to do with distrust, but are a strategic lever for psychological safety in your team—and how to implement them in compliance with GDPR.
What is a Background Check? (Definition)
Let's start with the basics. A contemporary Background Check Definition can be summarized as follows:
A Background Check (also called Pre-Employment Screening) is a structured process through which organizations validate specific background information about a person to ensure they are trustworthy and qualified for the position.
It's not about private curiosity or surveillance. It’s about Validation. You verify if the person you're hiring truly possesses the qualifications they claim to have. It’s the transition from “Blind Trust” to “Verified Trust.”
Alternative names and synonyms: In everyday HR, you'll come across various terms:
Pre-Employment Screening
Background Check
Reliability Check
Applicant Screening
Due Diligence Check (in the B2B context)
Why are Background Checks Conducted? (The 3 Hard Facts)
You might be wondering: "Do we really need this? We have good interviews." The market provides the answer. We see three major drivers that turn background checks from a “formality” into a strategic necessity.
1. Protection from “Resume Fraud” and AI Fakes
The technology to deceive has exploded. It’s no longer just about embellished gaps.
Level 1 (Embellishment): Slight exaggerations (almost normal).
Level 2 (Fabrication): Completely invented degrees or employers.
Level 3 (Deepfakes): A new, alarming trend. Already 17% of hiring managers report encountering “Deepfake Candidates” in video interviews. Without technological checks, you can no longer be sure who really sits before the camera.
2. The True Cost of a Bad Hire
What does a “Bad Hire” actually cost you? Often, it's generally estimated at 30% of the yearly salary. Experts (e.g., Kienbaum) drastically adjust this upwards for the DACH region: The costs are more like 150% to 300% of the yearly salary. Then there are the “Time-to-Hire” costs: In Germany, it takes an average of 55 days to fill a position. Can you afford to have a key position unfilled or misfilled for almost a year?
3. Psychological Safety & Signaling
Here it gets interesting: Strict checks attract better applicants (Signaling Theory). A-Players want to work with A-Players. When you conduct professional checks, you're signaling: “Quality matters here. We’re protecting you from toxic colleagues.” This significantly boosts the morale of the existing team.
What Is Verified in a Background Check?
A background check is not a rigid product but a toolkit. Depending on the risk associated with the position, the check is comprised of different modules.
Types of Background Checks
Pre-Employment Check: The standard before hiring.
Recurring Checks: Banks or security sectors often re-check annually to see if new risks (e.g., insolvency, sanction lists) have emerged.
Business Partner Due Diligence: Before you hire suppliers, you verify their integrity (KYBP).
Industries & Roles: Where Is It Mandatory?
Screening is particularly critical in regulated industries:
Finance (DORA/BaFin): Checks for money laundering and financial integrity.
Management & C-Level: Protection against reputational damage (the “wrong doctor” on the board).
Critical Infrastructure & IT: Protection against industrial espionage and sabotage.
The Components in Detail
What exactly is examined?
Identity Verification: Is the person real? (Basic protection against deepfakes).
Educational Qualifications: Does the degree actually exist? (Protection against degree fraud).
Employment History: Do the timelines match? This often reveals “Overemployment” cases (holding two full-time jobs secretly while working from home).
Sanction Lists: Is the person on international terrorism watchlists?
Background Check in Germany: What Is Allowed?
There is often uncertainty here. Many think of US crime shows and private investigators. The reality in Germany is strictly regulated by the GDPR and the Federal Data Protection Act (BDSG).
The principle is: Necessity. You may check everything that is necessary for the decision regarding the specific position.
✅ Allowed: Checking degrees and professional stations (professional suitability). Research in professional networks (LinkedIn).
⚠️ Partially allowed: Criminal records or credit scores. Only if the position requires it (e.g., working with money or children).
⛔ Forbidden: Research in private social media profiles (Instagram), questions about health or family planning.
👉 Want to know more? Read our detailed guide for HR here.
How Does a Background Check Work? (The Process)
A professional process always follows a clear scheme to be legally compliant and fair. Forget manual “Googling” – it is legally risky and inefficient.
The 5 Steps of the Process:
Obtain Consent: Transparency is everything. The candidate agrees to the check digitally.
Collect Data: The candidate uploads their documents (e.g., diploma) via a secure portal.
Verify Information: The software matches the data with primary sources (universities, commercial registers).
Create Report: You receive a structured report (traffic light system).
Make Decision: You make your decision based on verified facts.
Indicium’s Approach: The “Enabler”
At Indicium, we turn the tables. We are not controllers searching for errors. We are Enablers who validate successes. Our platform is mobile-optimized, allowing candidates to complete the check in 3 minutes on a smartphone. The result: No dropout rates, but a positive brand experience.
How Long Does a Background Check Take?
This is the crucial question in the “War for Talent.”
The Old Way (Manual): If your team contacts universities themselves or waits for authorities, it often takes 2 to 4 weeks. This massively increases your “Time-to-Hire” – and top talents jump ship.
The New Way (Indicium): With API interfaces and AI automation, it goes lightning fast.
Identity & Sanctions: Real-time.
Degrees & References: 24 to 48 hours.
Speed here is a form of appreciation. You show the candidate: “We work professionally and won’t keep you waiting.”
Best Practices for Fair Checks
To ensure your process is not only secure but also human:
Communication: Don’t sell the check as distrust, but as a quality standard (“We ensure a safe team”).
Data Minimization: Only check what's relevant for the job. A warehouse worker doesn’t need a credit check.
Standardization: Define fixed packages per job level to avoid discrimination.
Conclusion: Trust is Good, Indicium is Better
A Background Check is no longer a bureaucratic nuisance today. It’s your insurance against reputation damage, cost explosions, and toxic teams.
In a market where 77% of resumes are “optimized,” validation is the only way to genuine security. Turn your recruiting into a zone of trust.
Let’s discuss how Indicium can help you – without headaches and without waiting times.
Disclaimer: This report was created to the best of our knowledge based on the current legal situation in Germany, Austria, and Switzerland. It serves as general information and does not replace individual legal advice.
"Background checks have a shadowy existence in the EU; most should conduct them, but few do it correctly. We want to change that!"
Nabil el Berr, CEO
