Last month, a class action lawsuit was filed in federal district court for the Northern District of California, alleging that LinkedIn, violated the Fair Credit Reporting Act (“FCRA”) by selling users’ information. The suit alleges that LinkedIn’s reference search functionality, which permits prospective employers to obtain reports on “Trusted References” for a subscription fee, brings LinkedIn within the purview of the FCRA, and that these reports fail to comply with FCRA’s certification, disclosure, and notification requirements.

The suit details how LinkedIn collects and maintains a large amount of information on its users through their connections, yet represents to users that it does not license or sell user information to outside third-parties. Part of LinkedIn’s services is to also post job offers on the site, and as of the most recent quarterly report, there were more than one million jobs offered on the site.

The reference search feature permits potential employers to search for users’ references and LinkedIn will create a “Reference Report” containing the users’ employment history, which encourages the potential employer to contact the references. The suit alleges that this permits any potential employer to “anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather.”

Characterizing the “Reference Report” as a consumer report, the suit alleges that LinkedIn is acting as a consumer reporting agency and must comply with the FCRA. The suit seeks damages for the class, including punitive damages, for LinkedIn’s failure to comply with the FCRA.

It will be interesting to see how this case proceeds. It’s also a good reminder of the reach of the FCRA and the fact that the FCRA’s requirements apply with equal force to online activities. (See e.g. A Helpful Reminder on Social Media and Background Checks.)