FTC hands down first fines over social-media data collection
updated 06:46 pm EDT, Tue June 12, 2012
Spokeo fined for improperly collecting and marketing data
The Federal Trade Commission has fined data collector Spokeo $800,000 in the commission's first case relating Internet and social-media data sold for employment screening purposes. In its investigation, the Commission alleged that Spokeo had violated federal law in compiling and selling information gleaned from social networking sites. As The New York Times reports, the $800,000 fine represents a civil settlement Spokeo reached with the Commission, though the company was not required to admit wrongdoing.
The FTC alleged that Spokeo had violated the Fair Credit Reporting Act in marketing consumer profiles without the assurance that its customers would use those profiles for legal purposes. The Commission further charged that Spokeo had failed to ensure the accuracy of its profiles or to inform customers of the company's federal responsibilities with regard to handling consumer data.
Spokeo was also said to have used fake endorsements in its marketing. These endorsements were posted on blogs and other websites by Spokeo employees touting themselves as users of the service.
From 2008 to 2010, Spokeo is said to have sold "coherent people profiles" containing information on individuals' likely income, home worth, marital status, approximate age, hobbies, ethnicity, social media site participation, religion, and many other metrics. Some of this information is available for free on Spokeo's site, but customers that paid for the service were shown more detailed information. Spokeo marketed its data collections to human resources departments, background screening services, and recruiters..
The Commission voted 4-0, with one commissioner not participating, to refer Spokeo to the Justice Department for possible further charges. In a statement on the company blog, Spokeo claims to have made changes to its site and internal business practices to remain in compliance with the Fair Credit Reporting Act. Spokeo claims it is not a consumer report company, but instead a technology company focused on organizing people's data for their own benefit.
