FCRA Class Action Targets LinkedIn

Angela Preston

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Have you ever used LinkedIn to check up on someone? An employee or a prospective new hire? Of course you have–who hasn’t? And while I’ve never actually given the “recommendations” on LinkedIn much weight, I’ve often wondered whether employers actually rely on them to make a hiring decision. Social media sites have given us a whole new window through which to view candidates—both professionally and personally. A recent case has pushed the issue back into the headlines, and this time, LinkedIn is in the spotlight. The popular social network was sued on October 9, 2014, for alleged violations of the Fair Credit Reporting Act (FCRA). The class action, Sweet v. LinkedIn Corporation, filed in the Northern District of California, claims that LinkedIn’s reference checking services are essentially background screening functions that should be regulated by the FCRA.

The Case Against LinkedIn

The plaintiffs are claiming that LinkedIn has gotten into the background screening business, but isn’t playing by the rules. In legal terms, the plaintiffs claim that certain information on LinkedIn is a “consumer report,” information that is compiled for the purpose of employment decisions. In plain English, a consumer report is just a legal term for a type of a background check. The argument goes like this; since the information on LinkedIn is information compiled by a third party for the express purpose of being sold for use in employment, all of the protections and requirements of the Fair Credit Reporting Act (FCRA) apply. To be clear, the information that’s called out in the suit isn’t limited to the stuff you see on public profiles. It’s not the ubiquitous recommendations that you can see for free—the ones that seem to come from your best friend in third grade, your mailman, and your dog sitter. This paid service causing issues is called, “Trusted References.” Trusted References, the suit alleges, are actually reports compiled by the website, providing a reference search on job candidates or business prospects.

Similar Claims Against Spokeo

This is not a new theory—a similar case was made against Spokeo, a web-based service that paid an $800,000 settlement to the Federal Trade Commission (FTC) in 2012. The FTC alleged that Spokeo operated as a consumer reporting agency (CRA) and violated the FCRA by targeting the sale of consumer reports to employers and recruiters without following the law. According to the FTC, the deciding factor was that Spokeo “collects personal information about consumers from hundreds of online and offline data sources, including social networks and merges the data to create detailed personal profiles of consumers.” Spokeo marketed the profiles to employers, human resources professionals, and job recruiters under the tagline “Explore Beyond the Resume.” The FTC concluded that Spokeo quacked like a duck, and the company has since changed its business model.

Are Trusted Reference Reports Consumer Reports?

Now LinkedIn is facing similar claims for the Trusted Reference function. The act of “compiling” information and furnishing it to its members (who are recruiters and prospective employers) sounds a lot like the actions of a CRA. The complaint describes the experiences of the plaintiffs, describing situations where they were interviewed for positions that seemed promising, but were then turned down, presumably after the employers in question looked at their LinkedIn references. If the plaintiffs prevail in the argument that LinkedIn is a CRA, all of the related consumer protections of the FCRA kick in. The FCRA, enacted to promote accuracy and protect consumers, requires CRAs to do a few things before sending out reports. The plaintiffs claim that LinkedIn:

  • Does not obtain the required certifications,
  • Does not provide the required notices to its members who use the reports,
  • Does not require users have a permissible purpose, and
  • Do not have reasonable procedures to ensure maximum possible accuracy.

It would appear that anyone with a “Premium” LinkedIn account has access to the references without requiring any certifications about following the FCRA and without certifying a permissible purpose.  The most problematic allegation is the accuracy requirement. The complaint points out that LinkedIn does nothing to verify the accuracy of the information provided, since it comes directly from users. Members enter their own employment history, dates of employment, and job history.

Is Facebook Next?

As social media sites and web based services face fierce competition for revenue, advertisers and market share, they may be overlooking some important legal considerations. If the plaintiffs prevail here, the case could open the door for similar suits against sites that compile information for employers. Doximity, Plaxo and Jigsaw are all in the business of compiling contact information for professional use. Facebook is increasingly used by recruiters to reach prospective employees and vet candidates. If these services are marketing to employers and recruiters and providing compiled reports, they may be next to defend their practices in court.

Learn how to avoid risk on social media in our guide, “Screening Job Candidates via Social Media: Reckless Practice or Savvy Strategy?”




Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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