On June 21, 2022, the United States Department of Justice (DOJ) filed a complaint and settlement agreement in federal court alleging that a social media company violates the Fair Housing Act (FHA), 42 USC §§ 3601-3619, for using tools that allow advertisers of housing-related services to block certain users from seeing their ads based on users’ race, color, religion, gender, disability, family status and national origin, which are FHA protected characteristics. Under the settlement agreement, the social media company has agreed to cease using or modify its use of the tools, and will pay approximately $115,000 in civil penalties.
The FHA and its regulations prohibit, among other things, making or publishing advertisements for the sale or rental of housing that indicate preference, imitation, or discrimination based on race, color, religion, gender, disability, family status and national origin. However, the complaint alleges that the social media company, through its targeting and ad serving system, targets and serves housing-related ads to certain users while depriving other users based on protected characteristics. by the FHA or proxies for these characteristics. Specifically, the complaint alleges that the company’s proprietary tool, called the “Special Advertising Audience” tool, uses a machine learning algorithm to build audiences for housing and credit advertisers based on the data. collected from users of the social media company, which data encodes FHA-protected features or information closely related to those features. Additionally, the complaint alleges that an older version of the tool, called the “similar audience tool,” directly used demographics such as race, gender, religions, age, zip codes, and location. group membership, to select the audiences to serve ads to. For example, tests would have revealed that when an advertiser included only men in their “source audience” – or target audience – the lookalike audience tool allowed the advertiser to serve their ad to a population 99% male. Under the settlement agreement, the social media company will stop using the special hearing tool.
Additionally, the complaint alleges that the social media company is in violation of the FHA through its offering to housing-related advertisers an interactive tool called the “Ads Manager”, which allows an advertiser to upload a listing offered and define its eligible audience. using drop-down menus that allow the advertiser to include and exclude users based on their demographics, interests, and other characteristics. To address this allegation, under the settlement agreement, the social media company agrees not to provide any targeting options for real estate advertisers that directly describe or relate to FHA protected features, and to develop a new real estate advertising system to address racial, ethnicity and gender disparities between the audiences targeted by advertisers and the group of users to whom the advertisements are actually served.
The settlement follows recent statements by leaders of the DOJ and the Consumer Financial Protection Bureau regarding their mutual priority to pursue enforcement actions for fair lending violations and to assess the appropriateness of using algorithms for the loan decision.
