People search engine company Spokeo will pay $800,000 to settle U.S. Federal Trade Commission (FTC) charges that it marketed detailed information profiles on millions of consumers to companies in the HR, background screening and recruiting industries without taking steps to protect consumers required under the Fair Credit Reporting Act (FCRA).
Spokeo has responded in a blog post (see below).
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The FCRA is a law passed by Congress to promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies, and to regulate the use and dissemination of consumer reports.
According to the FTC, this is the first case to address the sale of Internet and social media data in an employment screening context.
The FTC basically alleged that Spokeo operated as a consumer reporting agency and violated the 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”.
The organization also alleged that:
“Spokeo deceptively posted endorsements of their service on news and technology websites and blogs, portraying the endorsements as independent when in reality they were created by Spokeo’s own employees”.
In the past, Spokeo has also been sued over Web tracking.
In addition to being fined $800,000, Spokeo is obviously also barred from future violations of the FCRA and making further misrepresentations about its endorsements.
The FTC says Spokeo collects personal information about consumers from hundreds of online and offline data sources, including social networks. It then merges the data to create detailed personal profiles of consumers, including their names, addresses, age ranges, email addresses and more.
The Commission alleges that from 2008 until 2010, Spokeo marketed the profiles on a subscription basis to human resources professionals, job recruiters, and others as an employment screening tool.
Spokeo in a blog post said:
It has never been our intention to act as a consumer reporting agency. We have made changes to our site and our internal business practices in order to ensure we don’t infringe upon the FCRA’s important consumer protections, and to ensure an honest and transparent service that will continue to be easy for our customers to use.
We are a technology company organizing people-related data in innovative ways. We do not create our own content, we do not possess or have access to private financial information, and we do not offer consumer reports.
Our agreement with the FTC will allow for a continued open dialogue regarding our business practices.