LinkedIn Avoids FCRA Liability for Its Reference Search Feature

LinkedIn Avoids FCRA Liability for Its Reference Search Feature

Federal law allows individuals to assert claims against consumer reporting agencies when those agencies violate the federal Fair Credit Reporting Act, a law designed to protect individuals from the transmission of inaccurate information about them. In a recent case, several job seekers brought claims against the company that owns and operates LinkedIn, a social network that claims to be “the world’s largest professional network” boasting “300 million” users.  The Claimants alleged LinkedIn’s “reference search feature,” which allows prospective employers to access information about individuals’ previous employers, infringed on their rights under the Fair Credit Reporting Act because they failed to provide required notice of rights and to certify compliance with federal law. In Sweet v. LinkedIn, Inc., a federal trial court dismissed claims against LinkedIn, finding that the job seekers could not establish liability against the social network, even if the court believed the facts asserted by the plaintiffs in their complaint. Plaintiffs claims:

1. LinkedIn does require users of its services to certify the user has complied with the restrictions on use of the reports, generated by LinkedIn.
2. LinkedIn does not provide notice with the report of the consumer’s rights under the federal FCRA.
3. LinkedIn does not take reasonable steps to insure users of its information are not using the information for impermissible purposes.
4. LinkedIn does not follow reasonable procedures to assure maximum possible accuracy of the information in its Reference Reports.
5. LinkedIn does not provide notice to users regarding obligations of users under the FCRA.
6. LinkedIn regularly furnishes consumer reports to third parties without procedures to inquire into the purpose for which the user is acquiring the report.

Instead of considering plaintiffs’ claims against LinkedIn, the court first considered whether LinkedIn is covered by the federal Fair Credit Reporting Act. The court decided that the Act does not apply to LinkedIn and provided five reasons:

1. LinkedIn’s publication of employment histories is not a “consumer report;”
2. LinkedIn is not a “consumer reporting agency” because it does not assemble information for consumer reports but, rather, assists consumers with their “information-sharing objectives.”
3. The listing of names and other information about job references does not bear on the “character, general reputation, mode of living” and other relevant characteristics of the consumers who are the subjects of the reports.
4. LinkedIn’s Reference Search results are not used or intended to be used as a factor in determining whether the subjects of the search are eligible for employment.

Job seekers regularly bring claims against employers for violations of the Fair Credit Reporting Act but most of those claims involve assertions that employers – the “users” of consumer reports – have failed to comply with the law. Attorney Caitlin Madden has previously provided guidance on these claims. In this case, the job seekers sued the information source (LinkedIn), which is much less common. As employers continue to look online for information about employment candidates, applicants should remain vigilant against the unlawful transmission of sensitive information about their personal backgrounds. While one court allowed LinkedIn to escape liability for its Reference Search feature, other companies may run afoul of the federal Fair Credit Reporting Act by collecting, offering, or using sensitive information in illegal ways.

Related: United States Supreme Court agrees to hear challenge to class action lawsuit against Spokeo.com

On Monday, April 27, 2015, the U.S. Supreme Court agreed to hear an appeal of a federal court decision upholding a class action against Spokeo.com. In Robins v. Spokeo, Inc., the Ninth Circuit Court of Appeals upheld a class action alleging that Spokeo violates the federal Fair Credit Reporting Act by publishing false information about him and other similarly situated individuals. The Ninth Circuit agreed with Robins and allowed his case against Spokeo to proceed because he alleged a violation of his statutory rights under the Fair Credit Reporting Act. As noted in the discussion of the LinkedIn case, above, FCRA requires consumer reporting agencies to comply with various provisions and those provisions allow individuals to sue consumer reporting agencies for failing to comply with that law, even if individuals cannot clearly identify an injury or harm. The Supreme Court will now decide whether these so-called “unharmed” or “uninjured” plaintiffs can maintain lawsuits against consumer reporting agencies that have failed to comply with the FCRA. Technology companies such as ebay, facebook, google and Yahoo! Have all filed briefs in this case urging the Supreme Court to limit individual rights under FCRA.