It's the common use-case: you don't know whether to trust someone. If you ever know anyone who is in danger of being hired by a friend, your friend will ask you how it was working with that person. This is usually a high-signal source because you're not going to lie to your friend, your recommendation or anti-recommendations are things you want to be meaningful, and because you have direct evidence.

They want to scale this. I've discussed this same thing with friends before but we couldn't find a way to keep it clean.

This is also a powerful advantage of a good network. You hear someone's leaving some job through the grapevine and if it's accompanied with positive feedback you hire this person. Or you're looking for a person and you ask your network for the guy who can do it.

That's how I got my current job.

Something that is at best bordering on unethical at worst a material breach of candidate confidentiality.