How Did Facebook Get Sued Successfully under the Housing Discrimination Laws without even Being a Landlord?

By passing a law called the CDA1, Congress decided to protect interactive computer services from any liability from material posted by others to promote open vibrant free expression on the internet.  Because of this law, a company like Facebook can’t be sued for an ad posted by somebody else in the same way a traditional newspaper can. Was this just a frivolous lawsuit?

No. – Facebook settled the case, agreeing to make some significant changes in its advertising practices, to pay several million in fees and in advertising credit, and agreeing, at least to some extent, to police its advertising of certain things, which it never previously had any legal obligation to do.

So How Could Facebook Ever Be Liable for its Advertising Content Despite being Legally Protected by this Federal Law?

Certain public interest fair housing groups sued2 Facebook for violations of the Fair Housing Act, over discriminatory ads for real estate sales and apartment rentals in New York City. Here’s how: When any real estate agent posted an ad on Facebook, it had a choice of whether to include or exclude certain groups of people. For example, if the real estate agent knew that the landlord didn’t want any young children in the building, it had the option of excluding those people with children of any given age from the target group. When buying ads, advertisers decide to include, or exclude, certain groups from their intended target audience. This includes Facebook ads that are “boosted’ or will be shown to certain other Facebook users. The idea for this lawsuit came from ProPublica’s article detailing how Facebook’s online platform effectively enabled advertisers to exclude blacks, Hispanics and other ethnic groups from receiving their ads.  Here’s what the portal actually allowed real estate agents to do:

In fact, the groups that brought the lawsuit placed an ad for a fictitious apartment and requested that African Americans and Hispanics be excluded. Facebook approved the ad and ran it. The people the advertiser didn’t want to rent to would simply never see their ad; it offered surgically accurate advertising placement that the unwanted customers would never see.

How is Facebook able to target its advertisements so precisely?

By watching your online behavior all the time! A very small portion of the information is self-reported by the Facebook users when they signed up for Facebook accounts, but the vast majority is obtained by tracking your on-line behavior without your knowledge, even when you’re not using Facebook. This raw information is refined using very effective programs called algorithms. For a partial list of the data Facebook has on you, see the Washington Post article entitled “98 Personal Data Points That Facebook Uses to Target Ads to You.” They know your ethnicity, how much money you make, your household composition, you political affiliation and how strongly you feel about it, your relationship status, what credit cards you have, whether you carry balances on them or not, whether you have a pet, what kinds of vacations you go on, etc.. While you can opt out from getting ads to some extent, you really cannot opt of being watched by Facebook and having your activity recorded for their advertising purposes.

Is it Legal for Facebook to Collect all this Information About You Without Even Giving You a Way to Opt Out?

Yes – Absolutely. There were certain rules made by the FCC under the Obama Administration in 2016 which guaranteed consumers the right to privacy for certain sensitive information, such as address, financial information, health information, social security number and web browsing history unless the consumer affirmatively “opted-in” to allow their internet service provider access to this information. The Republicans, with President Trump’s support, repealed these rules, saying that it would be unfair to shoulder internet service providers with this burden, because companies like Facebook and Google were perfectly free to collect all this information. Even if these rules had not been repealed, Facebook would still be perfectly free to collect all this information about you, and to use it to maximize its advertising revenue. Facebook’s response to this is that you do have a way to opt-out; Just don’t get a Facebook account. If you had a Facebook account and you deleted it, will they keep watching you? My guess would be yes, but we cannot answer that question without talking to tech people inside Facebook, who are not about to tell anyone because they don’t want the mechanics of how they watch all of us disclosed.

What Did the Facebook Settlement Accomplish?

Under the terms of the settlement, a separate portal is now required to advertise for HEC (Housing, Employment or Credit) which will basically not give advertisers the option to exclude based on gender, race, religion or sexual orientation, like they do in the example above. Advertisers will be asked if they are advertising for housing or employment, and if so, their targeting options will be limited.  Zip code targeting has also been eliminated and replaced by a minimum geographical radius of 15 miles.  The settlement will, however, continue to allow advertisers to discriminate against anyone they like as long as the ad is not for something involving housing, employment or credit.

[1] Communications Decency Act, 47 U.S.C. § 230(a)

[2] Nat’l Fair Housing Alliance, et al. v. Facebook, Inc., SDNY 18-cv-02689, filed March 27, 2018.