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Not sure if you are implying the US, but that is a common mistaken belief in the US. It's actually legal to give a negative review of a former employee, as long as it's 100% true. The problem is that the employee might try to sue for slander anyway (and win; that vindictive manager might have been the next one on the way out), so it's easier for employers to just have a blanket "no comment" or objective "eligible for re-hire: yes/no" policy.

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Wow, I was a manager at a swimming pool and the "HR" told us when we get calls from prospective employers we can only tell them the dates of employments and the job position. We couldn't rave about how good the employees were but we were allowed to write letters of recommendation. I always thought it was in law (california) which is why they told us that.

No reason for wow, it is clearly because they want to avoid a possible lawsuit. Play it safe.

how would the former employee even know? i feel like i've been the target of a previous company i worked at but i have no proof.

People sometimes do a background check on themselves to see what the employer says if they're suspicous about it. Other than that, I'd imagine the chances are pretty slim that some other prospective employer would spill the beans.

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