Social media giant Facebook is making significant updates to its online ad platform for housing, employment and credit ads as part of its settlement agreements ending five prior discrimination lawsuits filed against it.
Between 2016 and 2018, Facebook repeatedly found itself in legal hot water over alleged violations of the Fair Housing Act on its advertising platform, even after the company claimed to take steps to solve the problem.
The Fair Housing Act is a federal anti-discrimination law established in 1968 that prohibits discrimination in housing-related transactions on the basis of race, color, national origin, religion, sex, disability and familial status. Some state fair housing laws cover additional characteristics, such as sexual orientation, marital status, ancestry and creed.
The Fair Housing Act also makes it illegal to “make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling” that would discriminate against protected groups. All real estate agents and brokers must abide by fair housing laws.
Facebook first faced scrutiny over its online advertising practices, after an investigation from ProPublica in October 2016 found that Facebook allowed advertisers to exclude certain ethnic groups when posting ads for housing. This allowed advertisers, in effect, to create digital “whites-only” housing listings.
At the time of the initial investigation, Facebook said it would prevent this from happening again, but a year later, in November 2017, ProPublica found it was still able to place similar discriminatory ads.
The U.S. Department of Housing and Urban Development (HUD) filed a housing discrimination complaint against Facebook in August 2018. In the wake of that complaint, Facebook slashed more than 5,000 targeted ad options on its platform to limit the ability for advertisers to exclude audiences that relate to attributes such as ethnicity or religion.
The five lawsuits Facebook announced it had settled today are: Mobley et al. v. Facebook, National Fair Housing Alliance et al. v. Facebook, Communications Workers of America et al. v. Facebook, Spees et al. v. Facebook, and Riddick v. Facebook. The HUD litigation is still ongoing and Facebook is “working with them to address their concerns,” a Facebook spokesperson told Inman.
According to the NHFA, the “settlement agreement between fair housing groups and Facebook sets a new industry standard in Big Data and Tech concerning civil rights laws.”
“This settlement positively impacts all of Facebook’s 210 million users in the U.S. since everyone is protected by our nation’s fair housing laws,” said Lisa Rice, president and CEO of NFHA, in a statement.
“As the largest digitally-based advertising platform and a leader in Tech, Facebook has an obligation to ensure that the data it collects on millions of people is not used against those same users in a harmful manner,” Rice added, noting that Facebook took in $8.246 billion in advertising revenue in the U.S. and Canada in the last three months of 2018.
As part of its settlement agreement with fair housing groups, including the NFHA, Facebook denied any wrongdoing or liability, but agreed to pay $1.95 million to the groups for alleged damages and expenses.
Facebook also agreed to provide a $500,000 credit to the four fair housing plaintiff groups to place ads on Facebook to educate consumers and the housing industry about fair housing rights and responsibilities, to announce relevant events, to publish reports, and otherwise promote fair housing, the NHFA said.
As part of the settlements of all five lawsuits, Facebook will separate ads for housing, employment and credit (HEC) on its Ads Manager tool for Facebook, Instagram and Messenger, and no longer allow advertisers to target audiences by characteristics that describe or appear to be related to classes protected under anti-discrimination laws, including: race, color, multicultural affinity, national origin, ethnicity, gender, age, religion, family status, disability, and sexual orientation, among other protected characteristics or classes, according to a joint statement from the plaintiffs provided to Inman by Facebook.
To address concerns about perpetuating racial segregation, HEC ads will also be required to have a radius of 15 miles from a specific address or from the center of a city and advertisers will not be allowed to target by ZIP code.
In addition, Facebook’s “Lookalike Audience” tool, which helps advertisers identify Facebook users who are similar to advertisers’ current or intended customers, will be renamed and no longer consider gender, age, religious views, ZIP codes, Facebook Group membership, school, relationship status, interests or political views when creating customized audiences for HEC ads, the plaintiffs said.
“Housing, employment, and credit ads are crucial to helping people buy new homes, start great careers, and gain access to credit. They should never be used to exclude or harm people. Getting this right is deeply important to me and all of us at Facebook because inclusivity is a core value for our company,” said Sheryl Sandberg, Facebook’s chief operating officer, in a statement.
“Today’s changes mark an important step in our broader effort to prevent discrimination and promote fairness and inclusion on Facebook. But our work is far from over. We’re committed to doing more, and we look forward to engaging in serious consultation and work with key civil rights groups, experts, and policymakers to help us find the right path forward.”
Advertisers will be required to create HEC ads in the HEC “portal” and if the company detects that an advertiser has tried to create a HEC ad outside of the portal, the company will block and re-route the advertiser to the portal, the plaintiffs said. Advertisers will be required to certify that they are complying with Facebook policies and all applicable laws forbidding discrimination. Facebook will provide educational materials and features to inform advertisers about those policies and laws.
“Companies must understand that depending on how data is being used, it can harm people and communities. This agreement will help other companies that rely on algorithms and data for a range of services and operations to carefully consider whether their policies, products, and platforms are illegally discriminating against consumers,” said Fred Freiberg, executive director of another plaintiff, the Fair Housing Justice Center of New York (FHJC), in a statement.
Asked how the new ad rules will be enforced and whether Facebook staff will be monitoring ads or whether it will be done by algorithms, a Facebook spokesperson told Inman, “Any advertiser offering one of these products or services to people in the U.S. will be required to comply. We will employ various techniques, including using machine learning, to help prevent bad actors from getting around these requirements.”
Advertisers who try to break the rules “won’t be able to advertise and we could, worst case, suspend their ad accounts,” the spokesperson added.
A settlement agreement exhibit posted by the NFHA notes that “Facebook will implement processes to identify HEC Advertisements, automatically and/or through human review prior to the point at which Facebook approves any advertisements for publication.”
Regardless of whether users see housing ads in their Facebook news feeds, users will be able to see and search all current housing ads in a page that Facebook will create, which the NHFA settlement exhibit terms a “housing search portal.” The ads on that page will be all those that are for the rental, sale or finance of housing or other real estate-related transactions such as appraisals, mortgages and insurance.
Asked why WhatApp, which Facebook also owns, was not part of the new rules under the settlements, the Facebook spokesperson said the app “doesn’t have any applicable advertising flows yet so it doesn’t apply.”
The plaintiffs’ joint statement indicates that scrutiny of Facebook in this area will be ongoing. As part of the settlements, Facebook will meet every six months with the plaintiffs and their counsel to report on and discuss the implementation of the terms of the settlements.
Facebook must also allow plaintiffs to test its ad platform, work with the National Fair Housing Alliance (NFHA) to develop a training program for Facebook’s employees on fair housing and fair lending laws, and engage civil rights advocates and experts “to study the potential for unintended biases in the algorithmic modeling used by social media platforms.”
According to the NFHA settlement exhibit, Facebook agreed to implement its new HEC interface in its Ads Manager on or before September 30, 2019. Facebook will implement new audience selection tools for its remaining ad creation interfaces, such as Facebook’s Marketing API, on or before December 31, 2019. And its new housing search portal is set to debut on or before December 31, 2019.
“The Fair Housing Groups’ settlement agreement with Facebook sets a significant and historic precedent for Big Data and Tech companies throughout the country,” the NFHA said in its press release.
“As more consumers rely on Big Tech in their daily lives, it is important that companies abide by and enforce civil rights laws across their platforms. Big Tech and Big Data companies must not allow their platforms to become tools for unlawful behavior, including segregation and discrimination in housing and beyond.”
Editor’s note: This story was updated after publication to add additional information about a HUD complaint against Facebook and a comment from the company as well as comments from fair housing groups and additional information from the NHFA settlement agreement and exhibit.