In Sweet v. LinkedIn Corporation, a number of job applicants sued the social networking service for alleged violations of the Fair Credit Reporting Act based on LinkedIn’s “Reference Search” function.  The Court dismissed the complaint at the pleadings stage, holding that the reports were not “consumer reports” and that LinkedIn was not a “consumer reporting agency.”

According to the complaint, each time a LinkedIn user adds information to his or her profile, this information is added to LinkedIn’s professional database.  The plaintiffs alleged that LinkedIn provides a search functionality through which users can search for “references” for any LinkedIn member.  This “Reference Search” produces the names of the searched member’s current and former employers and other LinkedIn members who may have worked with the subject of the search.  According to the complaint, a potential employer can use these search results to obtain information on a job applicant when making an employment decision.

The plaintiffs claimed that LinkedIn’s Reference Searches contained information that negatively impacted their respective job applications.  Because they contended that the information furnished through these Reference Searches constitutes a “consumer report,” the plaintiffs sued LinkedIn for alleged violations of the FCRA.

The Court concluded that the information provided by LinkedIn was not subject to the FCRA.  The Court held that LinkedIn was not acting as a “consumer reporting agency” when publishing employment histories because the information in the histories was gathered for consumers’ information-sharing objectives rather than to make consumer reports.  The Court also concluded that the employment histories furnished by LinkedIn were not “consumer reports” because the information does not bear on a consumer’s character, general reputation, or mode of living – the hallmarks of a consumer report.

Sweet marks another attempt by plaintiffs to expand the reach of the FCRA.  Although the Court’s decision limits discussion of the applicability of the FCRA to LinkedIn in this instance, businesses must assess their FCRA compliance procedures, including an assessment of whether the FCRA applies to them as an initial matter.