Spokeo Hit With $800,000 Settlement On Allegations Of Haphazardly Marketing Personal Info To Employers

It’s one thing for your employer or potential employer to do a Google search on you, or scour through your public Facebook profile. It’s another for a company to market this information to employers and human resources departments for the express purpose of background screening. Doing so haphazardly could result in a violation of the Fair Credit Reporting Act.

This is the lesson being learned by Spokeo, which aggregates publicly available data info on consumers from social media networks and other sources — and which we first mentioned as a potential problem back in 2008 — and creates detailed profiles with information including name, address, age range, e-mail address, hobbies, ethnicity, religion, and photos.

Between 2008 and 2010, the Federal Trade Commission says Spokeo marketed a subscription service to human resources professionals, job recruiters, and others as an employment screening tool.

By doing so, Spokeo is alleged to have operated as a consumer reporting agency. However, the FTC claims that the company failed to provide three mandated protections of the FCRA:
1. To maintain reasonable procedures to verify who its users are and that the consumer report information would be used for a permissible purpose;
2. To ensure accuracy of consumer reports;
3. To provide a user notice to any person that purchased its consumer reports.

In 2010, the company changed its terms of service to state that Spokeo is not a consumer reporting agency and that the information on the site could not be used for purposes covered by the FCRA.

However, alleges the FTC complaint, “Spokeo failed to revoke access or to otherwise ensure that existing users, including subscribers who may have joined Spokeo through its Spokeo.com/HR page… did not use the company’s website or information for FCRA-covered purposes.”

In addition to the $800,000 civil penalty, the settlement order bars Spokeo from future violations of the FCRA (which is a bit redundant, as it should not be violating the law to begin with), and bars the company from making misrepresentations about its endorsements or failing to disclose a material connection with endorsers.

This is the first FTC case involving the sale of Internet and social media data in the employment screening context.