LinkedIn's "Reference Searches" function does not qualify as a consumer report by a consumer reporting agency under the Fair Credit Reporting Act ("FCRA"), according to a federal court in California.  In Sweet v. LinkedIn Corp., the United States District Court for the Northern District of California held that a group of applicants who claimed that they lost jobs after employers used the "Reference Searches" function failed to state a claim that the LinkedIn service is covered by the FCRA.

LinkedIn's "Reference Searches" function allows paid users to search for references for any LinkedIn member.  These searches report on both the applicant's former and current employers and provide a list of LinkedIn members who are in the searcher's network that may have worked with the search subject.  The search subject is not informed when a reference search is run on him/her.

A group of plaintiffs filed suit alleging that they had been denied positions after prospective employers conducted reference checks with information identified using LinkedIn's "Reference Searches" function.  The plaintiffs alleged that LinkedIn's offering of this service violated FCRA because these searches constituted a covered "consumer report" by a "consumer reporting agency" under FCRA, and LinkedIn had not implemented policies and practices in compliance with that law.

In concluding that the plaintiffs had failed to state a claim under FCRA, the court reasoned that reference search information did not constitute a "consumer report" and because LinkedIn is not a "consumer reporting agency," among other reasons.  As to the former, the statute lists a "report containing information solely as to transactions or experiences between the consumer and the person making the report" as an exception to the definition of "consumer report".  The court concluded that the meaning of "transactions or experiences between the consumer and the person making the report" contemplates situations where consumers provide information to an entity like LinkedIn to publish online. As such, LinkedIn's "Reference Search" information is excluded from coverage under FCRA.

The court also reasoned that the plaintiff's claim could not stand because LinkedIn does not fit within FCRA's definition of "consumer reporting agency".  The statute defines a "consumer reporting agency" as "any person which, for monetary fees?regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports."  LinkedIn does not gather customer information to generate consumer reports, but instead to carry out customers' information sharing objectives.  As such, it does not qualify as a "consumer reporting agency".

Because the plaintiffs had failed to plead sufficient facts to state a claim showing that LinkedIn and its "Reference Searches" function fit within the meaning of FCRA, among other reasons, the court concluded that they had failed to state a claim upon which relief could be granted.  As such, the complaint was dismissed without prejudice.  Sweet v. LinkedIn Corp.