F.T.C. Levies First Fine Over Internet Data
By EDWARD WYATT June 12, 2012
WASHINGTON - The Federal Trade Commission assessed an $800,000 fine on Tuesday against Spokeo, a data collector that the commission said violated federal law by compiling and selling people's personal information for use by potential employers in screening job applicants.
The action is the F.T.C.'s first case addressing the sale of Internet and social media data for use in employment screening.
Spokeo, of Pasadena, Calif., agreed to settle the civil charges without admitting that they are true. The trade commission alleged that Spokeo violated the Fair Credit Reporting Act by marketing its consumer profiles without making sure that they would be used for legal purposes, failing to insure their accuracy and neglecting to tell consumers of its own responsibilities under federal law.
The F.T.C. also charged that Spokeo created fake endorsements of its service and posted those comments on news and technology Web sites and blogs. In fact, the commission said, the comments were made up by Spokeo's own employees.
The trade commission normally does not have the ability to assess fines, but in this instance it was allowed to do so under the Fair Credit Reporting Act.
In a statement posted on its corporate blog, Spokeo said it has made changes to its business practices and Web site to ensure that it does not violate the consumer protections of the Fair Credit Reporting Act.