A start-up is taking on Equifax’s employee verification service, and it now has a bit of a war chest too.
The new company, Truework, will try to compete with an Equifax service known as The Work Number, which helps employers handle all of the irritating notices they receive from banks and other entities that want to verify a person’s employment history and salary. The gears of consumer credit can’t function well without this process, but it’s a pain for employers and, as a result, a lucrative business for Equifax.
Most employees do not know that their employer hands over sensitive information to Equifax and similar services each pay period, even though workers have agreed to some kind of employment check somewhere along the way. And Equifax does not notify those workers each time it gives information to a bank or a potential landlord.
Truework aims to change that, promising that an employee will receive a message at their work email address each time an entity seeks information about them. The recipients would click to see what information their employers plan to share and can approve the handoff.
“These things were built for lenders, which is fine,” said Ryan Sandler, a Truework co-founder who previously worked at LinkedIn. “But they left employers and employees as the second and third priority. We wanted to flip the model on its head.”
Employers pay to use these services, as do banks and others that grant credit. Mr. Sandler said that his company intends to charge banks at least one-third less than Equifax does. This week, it announced that it had raised $2.9 million from several investors to help the effort.
Equifax claims to help more than 5,500 employers, including over 75 percent of Fortune 500 companies and many federal agencies, with its Work Number service. That means most larger companies already have a system in place that they believe works well, a significant challenge for Truework and its efforts to attract business.
But after several breaches at Equifax, some companies are reconsidering their relationships with the data provider — though it remains the dominant player in the field of verifying information about employees. The University of Louisville was caught up in one Equifax breach and decided to take its business elsewhere. The New York Times has stopped using Work Number and now does its verification in-house.
Christine Noonan, human resources manager at the Motley Fool, the finance website in Alexandria, Va., said that when her company handled requests in-house, she averaged about one request a day from lenders and others wanting to check up on the company’s 300 or so employees. “Sometimes there’s a language barrier,” she said. “Sometimes they insist on sending the request by fax. That’s fun.”
She switched the company to Truework about six months ago and has heard little feedback from her colleagues, save for one person who worried whether the email request for approval was legitimate.
“Our employees don’t reach out to me unless there’s an issue,” she said, “and if I don’t hear anything, then everything is good.”