CDT Complaint Against Spokeo Leads to $800,000 Settlement With FTC
This is a really important case that will hopefully offer needed guidance on how the Fair Credit Reporting Act applies in the age of social media.
Washington – The FTC announced today that data broker Spokeo will pay $800,000 to settle allegations stemming from a two-year-old complaint filed by the Center for Democracy & Technology.
The Commission said this was its first case to "address the sale of Internet and social media data in the employment screening context."
CDT's complaint to the FTC outlined Spokeo’s willful violations of the Fair Credit Reporting Act (FCRA) and focused on the company's unfair and deceptive business practices. CDT urged the Commission to use the complaint as an opportunity to tackle the growing issue of online—and offline—data aggregators offering unregulated consumer profiles.
“Spokeo sold shoddy consumer reports to prospective employers without offering the very basic protections required by law," said Justin Brookman, Director of CDT's Project on Consumer Privacy. "This is a really important case that will hopefully offer needed guidance on how the Fair Credit Reporting Act applies in the age of social media."
Spokeo offered detailed profiles about millions of Americans on its website, Spokeo.com. These profiles contained highly personal information, including religious and ethnic background, judgments about shopping and recreational habits, and information about family members and roommates. Spokeo also offered "Credit Estimate" and "Wealth Level" ratings for the millions of people in its database, while actively marketing its services to employers for use in hiring processes.
The FTC said Spokeo violated FCRA "by failing to make sure that the information it sold would be used only for legally permissible purposes; failing to ensure the information was accurate; and failing to tell users of its consumer reports about their obligation under the FCRA, including the requirement to notify consumers if the user took an adverse action against the consumer based on information contained in the consumer report."