In its first enforcement action under the Fair Credit Reporting Act (FCRA) to address the sale of Internet and social media data in the employment screening context, the Federal Trade Commission (FTC) has announced that it had entered into a $800,000 settlement with an online data broker, Spokeo, for allegedly marketing consumer profiles to employers and recruiters without complying with the requirements of FCRA. In addition, Spokeo settled charges that it violated Section 5 of the FTC Act by posting surreptitious endorsements of its service under the names of others. According to the FTC’s complaint, Spokeo collected personal information about consumers from hundreds of online and offline data sources, including social networks, merged that information into detailed personal profiles and marketed these profiles to businesses. Despite Spokeo having a disclaimer stating that it was not a consumer reporting agency subject to FCRA, the FTC disagreed. Therefore, because Spokeo did not comply with the obligations of FCRA-covered entities, it was subject to statutory penalties under FCRA of up to $3,500 per violation.
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