Your employer accuses you of some misdeed, like theft, and fires you. When you file for unemployment, they contest it, but you win. You're innocent, and they've got no proof otherwise. But it doesn't matter--they've already submitted a report to the background check company they work with. That entry gets you bonged from future jobs you apply for. Does it matter that your record with that company is wrong? No. In fact, they'll claim it's not even their fault--they "merely conveyed information provided by a former employer". Now, you probably have recourse in civil court. But if you're down to making $17K a year because you can't get a better job, you can't afford a lawyer to fight it, can you?
Even I might eventually have this kind of problem. See, I live in a townhouse. It's nice, but it's kind of small. There's some things that I can't buy because I have no place to put them, like a pool table. So if I want to play pool with some friends, we'll go to a pool hall. (Well, we did, until it closed.) Sometimes I forget to hit the ATM on the way, so I'll pay by credit card. Oops. Some credit companies think that makes me a bad person. And remember, all these companies make money by selling their arbitrary information to each other. One piece of "bad" information can spread like a virus.
Don't think you can just call someone up and square things. Remember the modern corporate mantras: "Sorry, it's company policy" and "We collect information from a variety of sources, we couldn't identify the source of this entry even if we wanted to."
The only solutions are stricter regulation of credit reporting and granting agencies, and new, strict regulations of background check companies in the same vein. Alternately, they could all DIAF.