HUD Charges Facebook with Violating the Fair Housing Act over Targeted Ads

Bradley Arant Boult Cummings LLP

The United States Department of Housing and Urban Development (HUD) recently announced charges against social media company Facebook for violating the Fair Housing Act (42 U.S.C. 3601-3619 and 3631). The charges derive from Facebook enabling housing advertisers to target Facebook users based on protected class status: race, nationality, religion, color, familial status, sex, and disability. HUD Secretary Ben Carson, in a March 28, 2019 press release, stated that “Facebook is discriminating against people based on who they are and where they live . . . . Using a computer to limit a person’s housing choices can be just as discriminatory as slamming the door in someone’s face.” HUD alleges that Facebook’s advertising platform is designed in a way that “ads for housing and housing-related services are shown to large audiences that are severely biased based on characteristics protected by the Act . . . .” HUD further alleges that Facebook’s advertising platform provides tools to advisers to exclude members falling into certain categories from receiving housing-based ads.

These allegations are not new. In late 2016, the Obama administration began a preliminary investigation into Facebook based on similar allegations, and HUD Secretary Carson filed an administrative complaint in August 2018. These allegations stemmed from a 2016 Pro Publica report claiming that housing advertisers could use Facebook’s advertising platform to exclude users based on protected categories. In addition, several non-profit fair housing organizations filed a federal lawsuit in the Southern District of New York. These actions were all originally discussed on the Bradley blog in September 2018.

What makes HUD’s latest charges especially concerning to housing advertisers and advertising platforms is that they come just a week after Facebook settled multiple lawsuits with housing and civil rights organizations by agreeing to conduct a major overhaul of its ads software. Specifically, Facebook has removed housing advertisers’ ability to micro-target individuals based on certain categories such as age, gender, familial status, sexual orientation, ZIP code, national origin, etc. Facebook also paid around $5 million in costs and legal fees. HUD’s charges are yet another indication that it will take aggressive action to enforce the Fair Housing Act.

HUD’s charges are also indicative of its commitment to applying the Fair Housing Act to new modes of communication, advertising, and technology. Social media and other forms of big data give housing advertisers unprecedented ability to target both mass audiences as well as specific groups through segmentation and micro-targeting. There are obvious benefits to housing advertisers’ ability to cheaply and efficiently reach potential customers. However, the nature of this type of advertising lends itself to potential violations of the Fair Housing Act. Add to this mix non-profit fair housing groups actively seeking to file private actions and a HUD that has proven to be aggressive in its enforcement of the act, and you have a particularly dangerous situation for housing advertisers and advertising platforms alike. Thus, it is important that financial institutions, lenders, real-estate brokers, property managers, and any other organizations that advertise real estate or real-estate services over social media have a robust set of policies and procedures regarding the use of social media advertising. Moreover, all employees involved in these institutions’ social media presence should be sufficiently trained on policies and procedures designed to prevent Fair Housing Act violations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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