Yes the FCRA regulates consumer reports and background checks are consumer reports even if they are not mentioned in the text. https://www.consumer.ftc.gov/articles/0157-employment-backgr...
Please speak to a lawyer before making false statements.
Companies such as yours are prohibited from disclosing it because you are classified as "consumer reporting agency" however the disclosure of criminal records by non-consumer reporting agencies is not limited to 7 years.