Spokeo Settles FTC Privacy Case for $800,000

By John Wagley

Spokeo, an online data broker, has agreed to pay $800,000 to settle Federal Trade Commission (FTC) charges that it marketed and sold data to human resources, background screening, and recruiting industry professionals without protecting consumers as required under the Fair Credit Reporting Act (FCRA). The agreement is the first FTC case concerning the sale of Internet and social media data in the hiring context, according to an FTC statement.

The FTC alleges that Spokeo operated as a consumer reporting agency and violated the FCRA by failing to make sure the information it sold would be used for legally permissible purposes. Spokeo is also alleged to have failed to properly ensure the accuracy of information and to have informed customers about certain FCRA obligations, including that they would need to inform consumers if adverse action was taken against them due to sold data.

Allegations also include that the company ran online advertisements aimed at possible employers and that it created a special portion of its Website for recruiters. The FTC also alleged that Spokeo deceptively posted endorsements of their services online, portraying the endorsements as independent when they were actually created by Spokeo.

The company collects personal information about consumers from hundreds of online and offline data sources, including social networks, according to the FTC. The profiles contained information including name, address, age range, and e-mail address and might also include information including hobbies, religion, or ethnicity.

Spokeo has made changes to its site and internal business practices since the allegations were first filed, according to a blog post by Harrison Tang, the company’s founder and president. Such changes have helped to ensure that “we don’t infringe upon the FCRA’s important consumer protections.” They also help to generate “an honest and transparent service that will continue to be easy for our customers to use.”

In its statement, the FCT said that the settlement did not constitute an admission by Spokeo of any legal violations.

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