Are data brokers like Spokeo responsible for people not landing a job?

A California firm that scoured social-media sites and other sources to compile profiles of consumers for potential employers agreed to pay $800,000 under a settlement with the Federal Trade Commission, which accused the firm of misusing the data it collected.

The deal with Spokeo Inc., announced Tuesday, marks the first time the FTC has addressed the sale of Internet and social-media data for employment-screening purposes.

Spokeo pulled information — such as address, marital status, hobbies, ethnicity and religion — from Facebook, Twitter and other sources to create profiles that it sold to job recruiters from 2008 until 2010.

But the FTC alleges that Spokeo ran afoul of the law that governs use of consumer information, including data gathered to determine job eligibility. Spokeo functioned as a consumer reporting agency but failed to follow the rules imposed on such agencies.

For instance, it did not take adequate steps to verify the accuracy of the information it was disbursing, the FTC said. It also failed to inform recruiters who used the information of their obligations, including the need to notify consumers if they were rejected for a job based on the Spokeo profile.

“Consumers didn’t realize that these reports were used as a factor in determining whether they would get a job,” said Jamie Hine, a staff attorney at the FTC. “If the report was riddled with errors, the consumer didn’t have recourse.”

The FTC also alleged that Spokeo published bogus customer endorsements on news and technology websites and blogs, portraying the endorsements as independent, when in fact Spokeo employees created them. Spokeo, as is common with FTC complaints, agreed to pay the fine without admitting guilt or liability.
Under the Fair Credit Reporting Act, entities that broker certain information about consumers, such as credit reporting agencies, must make an effort to provide fair and accurate information and give people an opportunity to correct inaccurate information about themselves. The data brokers must also put limits on who can access the data.

The case stems from a complaint filed in 2010 by the Center for Democracy and Technology, which accused the company of providing information about individuals’ credit ratings and other financial data without disclosing the source of the data or allowing individuals an opportunity to dispute and correct false information.

The site also did not let individuals know who had sought access to their information or inform employers that federal law required them to notify a job applicant if they didn’t get a job based on information Spokeo provided.
http://www.washingtonpost.com/business/economy/spokeo-to-pay-800k-under-ftc-settlement-accused-of-misusing-data/2012/06/12/gJQA6y6xXV_story.html

http://www.wired.com/threatlevel/2012/06/spokeo-fined-800k/

FTC Agreement: http://ftc.gov/opa/2012/06/spokeo.shtm