More on social media profiling in Employment

June 21, 2012

Data broker Spokeo must ante up $800K to settle FTC charges

In an interesting development on employer use of social media data, a federal agency has turned its attention to sellers of social media data used in the hiring and employment context.

Last week, the Federal Trade Commission (FTC) announced that online data broker Spokeo, Inc., would pay $800,000 to settle charges that its practices violated consumer protections guaranteed in the Fair Credit Reporting Act (FCRA) — this is the first such action by the FTC against a broker of online data. The FTC alleged that Spokeo had compiled consumer data and marketed consumer profiles to human resources departments and recruiters for employee and job applicant screening. According to the FTC’s complaint, this occurred from 2008 to 2010.

What did Spokeo do wrong?

The FTC alleged that Spokeo’s actions violated three important provisions of the FCRA:

  • To ensure that consumer reports are accurate;
  • To provide a user notice to anyone who bought a consumer profile; and
  • To maintain protocols to confirm who was using its profiles and that users had a “permissible purpose” to do so.

The FTC also targeted Spokeo’s website endorsements — the FTC alleged that, in reality, these endorsements were written and posted by Spokeo employees posing as customers — as an unfair or deceptive practice or act in violation of the Federal Trade Commission Act.

The Department of Justice has filed the complaint and proposed order in the Central District of California where it awaits court approval. The Federal Trade Commission website has more information about the case against Spokeo on its website.

After the FTC’s action against Spokeo…

Notably, the FTC did not say that data brokers could not sell consumer data to interested parties, including employers. Rather, the FTC’s actions indicate that the protections offered in the FCRA apply to more entities than just traditional consumer reporting agencies, such as Equifax or TransUnion. After the FTC action against Spokeo, data brokers should be on notice to comply with the FCRA and other applicable laws in their marketing efforts and in content gathering and notice procedures.

Source: “Spokeo to Pay $800,000 to Settle FTC Charges Company Allegedly Marketed Information to Employers and Recruiters in Violation of FCRA,” Federal Trade Commission, 6/12/12