New York Department of Financial Services opens investigation into Facebook advertisers

Ballard Spahr LLP
Contact

Ballard Spahr LLP

Only a few months have passed since the U.S. Department of Housing and Urban Development filed a charge of discrimination against Facebook, alleging that the ad-targeting techniques used to determine which users would see advertising related to housing and housing-related service (like mortgage loans) were based on protected characteristics and “close proxies” for those characteristics, violating the Fair Housing Act.  Now, the New York Department of Financial Services has opened a similar investigation, in response to a request from the Governor of New York.

But although the HUD charge of discrimination is squarely aimed at Facebook itself – even alleging that Facebook used protected characteristics in targeting ads without advertisers’ knowledge – the statements surrounding the New York investigation focus on the conduct of advertisers who may have used protected characteristics to direct their ads.  A quote from NYDFS Superintendent Linda Lacewell stated that “[t[he Department will investigate Facebook advertisers to examine these disturbing allegations and we are prepared to take whatever measures necessary to make certain that all financial services providers are in compliance with New York’s stringent statutory and regulatory consumer protections.”

While this emphasis on advertiser conduct differs from the HUD charge of discrimination, the NYDFS press release suggests that the investigation could also involve Facebook’s conduct.  For example, the press release includes a quote from NY Lieutenant Governor Kathy Hocul in which she stated that “[w]e are taking action to fully uncover the deeply concerning allegations being made against Facebook.”

What is obvious, though, is that there seems to be a groundswell of regulatory concern about targeting of digital advertising based on protected characteristics under anti-discrimination laws, and especially targeting on the Facebook platform.  Financial services companies need to be aware of the characteristics that they are consciously using to target advertisements, and also need to inquire of third parties about the factors that may be used to create “lookalike” campaigns or similar efforts to reach targeted groups of customers.  As more regulatory investigations are announced, the danger level for financial institutions using targeted digital advertising only grows, and so does the need for transparency by advertising providers like Facebook.   At the moment, this is still a very uncertain area of the law, with almost no regulatory guidance or precedent to guide financial institutions.  The recent announcement by NYDFS tells us, though, that there is real risk in this uncertain area, so caution is most certainly needed.

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.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.