Advertisers have always targeted their marketing to the demographic most likely to be interested in their product, but is there a difference between running an ad that you know will probably mostly be seen by people who fall into just one ethnic group and an ad that actively excludes people outside of that group?

That’s the question underlying a new story from ProPublica, which looks at the ability for Facebook advertisers to target users based on their “Ethnic Affinity.”

The social network’s settings for ad buyers can be quite granular, allowing you to specify things like education, income and net worth, and the aforementioned ethnic affinity. It also lets you set exclusion rules for your ad based on many of these same categories.

So, for example, you can target users with college degrees and net worths of between $200,000 to $500,000 while excluding users with net worths higher than $750,000 whose ethnic affinity is Asian-American.

Where this gets particularly problematic is when it involves advertising for things like job openings or housing, where excluding a particular ethnic demographic could be viewed as discriminatory, in violation of federal laws.

To test Facebook’s ad system, ProPublica actually went through the process of purchasing an ad targeting people who were likely to move or otherwise seem interested in buying a house, while excluding users with ethnic affinities of African-American, Asian-American, or predominantly Spanish-speaking Hispanic.

The Fair Housing Act prohibits the printing or publishing of any ad involving the sale or rental of a dwelling that “indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination.”

In spite of this, notes ProPublica, its ad was approved by Facebook within 15 minutes with no changes.

Facebook defends the Ethnic Affinity category, saying it’s not the same as ethnicity or race, and in fact Facebook does not know a user’s race. Instead, a user’s Ethnic Affinity is based on their interactions on the site: the content they share and interact with.

“We take a strong stand against advertisers misusing our platform: Our policies prohibit using our targeting options to discriminate, and they require compliance with the law,” the privacy and public policy manager at Facebook tells ProPublica. “We take prompt enforcement action when we determine that ads violate our policies.”

He contends that advertisers use the Ethnic Affinity categories to test different marketing to different audiences. Spanish-speaking or bilingual Hispanic users could be targeted with a Spanish-language ad, while others would get the same ad in English.

But language is different from ethnicity and only the Hispanic Ethnic Affinity has subgroups regarding the language they prefer; the Asian-American category, for instance, does not reflect that these users could primarily speak or be bilingual in any of the many languages spoken in Asia. Additionally, there is a separate line item in the advertising settings for “Language.”

Civil rights lawyer John Relman looked at Facebook’s exclusion settings and told ProPublica that, i his opinion, using these tools to restrict who sees a housing-related ad “is about as blatant a violation of the federal Fair Housing Act as one can find.”

Facebook says it is planning to move the Ethnic Affinity category out from under the “Demographics” header, but if advertisers are still able to use the category to exclude users, this change will probably not quell critics’ concerns.

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