Online data broker Spokeo agreed to pay $800,000 to settle Federal Trade Commission (FTC) charges that it marketed information profiles on millions of consumers to companies that used them for employment screening, without taking necessary steps to protect consumers. This misuse of data violated federal law, specifically the Fair Credit Reporting Act (FCRA), because Spokeo operated as a consumer reporting agency but it failed to disclose the source of its data or give consumers the chance to correct inaccurate information, among other things. The conduct occurred between 2008 and 2010 when the company marketed the data on a subscription basis. The settlement was announced by the FTC on June 12, 2012.
Spokeo is a data aggregator, merging personal information it collects about consumers from online and offline data sources to create detailed individual profiles of consumers. A profile might include name, address, age range, email address, ethnicity, religion, photos, hobbies, and participation on social networking sites. Spokeo describes itself as a “people search engine.”
This case is important because it’s the first FTC case to address the sale of Internet and social media data for employment screening. The FTC also accused Spokeo of posting deceptive endorsements of their services on news and technology websites and blogs “portraying the endorsements as independent when in reality they were created by Spokeo’s own employees.” These misleading endorsements violated the Federal Trade Commission Act.