Bloomberg News

Spokeo Settles U.S. Data Privacy Complaint for $800,000

June 12, 2012

Spokeo Inc., a data broker that compiles dossiers on consumers, agreed to pay $800,000 to settle allegations by the U.S. Federal Trade Commission that it sold personal information in violation of the law.

From 2008 to 2010, Spokeo sold profiles on millions of consumers to human resources departments and companies that do background screening and recruiting without making sure the information would be used only for legally permissible reasons, the FTC said today in a statement on its website.

Spokeo, a Pasadena, California-based search engine, also failed to make sure the information was accurate or tell its clients they are required by the Fair Credit Reporting Act to notify anyone against whom they take adverse action based on the reports.

“This is the first commission case to address the sale of Internet and social media data in the employment screening context,” the FTC said in the statement.

The FTC also alleged that Spokeo deceptively posted endorsements of its service on news and technology websites and blogs, portraying those endorsements as independent when they were created by Spokeo’s own employees.

Under the settlement, Spokeo is also barred from future violations and from making misrepresentations about its endorsements.

Spokeo said today on its website that it doesn’t create its own content, doesn’t have access to consumers’ financial information and doesn’t offer consumer reports.

“We have made changes to our site and our internal business practices in order to ensure we don’t infringe upon the FCRA’s important consumer protections,” Spokeo said.

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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