Are 3rd Party Background Checks An Invasion Of Privacy?

TheGeneration asks: "Yesterday I went on an interview with a company where I was applying for a jr. programming position. The last page of the application was a contract for a background check with a third party company, that apparently does background checks on employees. They sift through ALL of your personal records (financial, past employers, criminal record, military record, driving record, etc.) and then report back to the employer. They also warehouse that information to be sold to other companies at a later date. I declined to sign this form citing concern about giving up my right to privacy for all time to a company that would then sell that info. I was denied an interview as a result. Is it ethical for companies to force potential employees to give up all rights to their privacy?"