Federal Agencies Investigate Facebook for Legal Violations

Facebook is under investigation by the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), the Justice Department and the Department of Housing and Urban Development (HUD) for numerous potential civil and criminal violations. The Silicon Valley company, which denies the charges, said it is cooperating with law enforcement. The HUD investigation, the most recent, states that Facebook allowed advertisers to restrict who they target, based on race, religion and national origin.

The New York Times reports that the FTC is “investigating potential privacy violations by the social network,” sparked by an earlier NYT report on “the harvesting of Facebook user data by a political consulting firm, Cambridge Analytica.” A fine of $1+ billion could be levied against Facebook, if it broke its 2011 promise to “tighten protections of user data and explain clearly to users how it handled sensitive data.”

The SEC is also investigating the fallout of the Cambridge Analytica event, looking at how much Facebook knew about the harvested data “and if executives of the social network properly disclosed its findings.”

The Justice Department’s securities fraud division is reportedly looking into “whether Cambridge Analytica improperly obtained data on Facebook users … [and] if Facebook properly disclosed what it knew about data-sharing with Cambridge Analytica before news reports revealed the practice.” The U.S. attorney’s office for the Eastern District of New York is also “conducting a criminal investigation into Facebook’s data-sharing partnerships with dozens of tech companies, including Amazon, Apple, Microsoft and Sony.”

Elsewhere, NYT examines HUD’s suit against Facebook for using “its data-mining practices to determine which of its users are able to view housing-related ads” as well as allowing advertisers to target individuals based on discriminatory characteristics, both of which put Facebook in violation of the federal Fair Housing Act. HUD’s three-year investigation into Facebook was sparked by a 2016 ProPublica investigation.

“Facebook is discriminating against people based upon who they are and where they live,” said housing secretary Ben Carson. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.” Although civil rights advocates are looking at many big tech companies, Facebook drew attention when “it became clear that its ad-targeting technology … was among the Russian government’s primary tools for meddling in the 2016 presidential election by exploiting racial and other rifts in the United States.”

Although Facebook took some “steps to prevent the same thing from happening in the 2018 midterm elections … its main business continues to be based on identifying and dividing its users by characteristics, and then selling that information to those who hope to capitalize on it.”

“Facebook is a platform based entirely on how easy it is to connect the right advertisers to the right people,” said veteran advertising industry executive Ian Schafer. “The fact that you can do that doesn’t always mean that it can have a good or popular outcome.” HUD has also started looking into “the actions of other tech companies,” including Google and Twitter, said a source.