Facebook and fair housing in 2019

President Lyndon Baines Johnson signed the Fair Housing Act into law on this date, April 11, in 1968. The landmark legislation -- also known as the Civil Rights Act of 1968 -- had been championed by President Johnson and Dr. Martin Luther King, Jr., and it prohibited landlords, sellers and banks from treating tenants, homebuyers and borrowers differently because of race, color, religion and national origin.

Ending housing discrimination and segregation was Dr. King's final dream. In fact, his April 4 assassination propelled the fair housing bill through what many had believed to be an unbreachable wall of segregationist congressmen.

Fifty-one years later, housing discrimination has taken on new forms through the Internet that Dr. King and President Johnson would scarcely recognize, but their bill still holds to prohibit even the most subtle and sophisticated forms that technology can muster. Using the FHA, fair housing advocates and enforcement agencies such as the U.S. Department of Housing and Urban Development have been successfully challenging discriminatory housing practices on the Internet since at least 2002.

The most recent challenge may be the most illustrative: HUD's March 28, 2019, administrative complaint detailing myriad FHA charges against Facebook.

HUD's complaint alleges that Facebook has encouraged, enabled and caused housing discrimination through the company's advertising platforms. The allegations detail a seeming attempt to use technology, algorithms, blinds and double-blinds to circumvent the FHA.

Facebook's Housing Advertisements

HUD's complaint alleges that Facebook enables housing discrimination through a complex process. First, it groups its users (221 million active users in the United States) who "like" similar pages (unrelated to housing) and then presumes a group's shared interest or disinterest in housing-related advertisements. Facebook combines this information with data the user voluntarily provides to it along with the data it collects on other websites such as Instagram.

For example, if a hypothetical user named Maria signs up with Facebook, she might state on her page that she is a married female living in Los Angeles. After signing up, she has "liked" on Facebook and Instagram many pages, photographs or events referring to Latina culture, her church, and her children's elementary school. Facebook assigns her to several target groups based on that data.

At that point, HUD alleges, "Facebook's mechanisms function just like an advertiser who intentionally targets or excludes users based on their protected class." So applying algorithms to all the data it mined from Maria, Facebook now predicts how she (and everyone else in her group) might view a housing opportunity. And it targets her with an ad for a particular housing opportunity. Or, more ominously, decides to not let her know about it.

Sometimes housing providers do not realize that Facebook has done this for them. Therefore, neither Maria nor the provider might ever know that Maria was never shown the housing opportunity. This odd, double-blind type of discrimination has not been seen before and is emblematic of what is possible with technology on what some believe to be a relatively lawless environment on the internet.

Facebook also allegedly gives the housing provider the choice to discriminate. It provides targeting tools such as toggles, search boxes, and even interactive maps to define who sees or doesn't see an ad. The HUD complaint alleges that this offers housing advertisers "attributes from which to choose, for example to exclude . . .foreigners, Puerto Rico Islanders, or people interested in parenting, accessibility, service animal, Hijab Fashion or Hispanic Culture."

The HUD complaint also accuses Facebook of providing "a map tool to exclude people who live in a specified area from seeing an ad by drawing a red line around that area." That allegation will remind any civil rights advocate or historian of the discriminatory redlining practices that many lenders have been caught red-handed doing for decades. (Google, Twitter, Amazon and other web services also allow advertisers to target ads by using ZIP codes.) If Maria lives in a minority neighborhood of Los Angeles and housing providers with housing outside those areas want to limit marketing to her, Facebook allegedly enables that.

Facebook also offers a tool called Lookalike Audiences. If you are thinking that the tool's name sounds like something that HUD might have an FHA quarrel with, you would be correct. HUD alleges that the tool allows a housing advertiser's ads to be seen only by "eligible" users who Facebook thinks share "common qualities" with the advertiser. According to the HUD complaint, "to generate a Lookalike Audience, Respondent [Facebook] considers sex and close proxies for the other protected classes." Then, during the ad delivery phase, Facebook "selects from among the users eligible to see an ad which users will actually see it."

There are other allegations regarding pricing and other customized audiences. If HUD can prove these disturbing allegations, they are unique enough to at least test the FHA.

Application of the Fair Housing Act and the Communications Decency Act

HUD's investigation of Facebook began in 2016 under the Obama administration. By refusing to purge these and other insidious practices from its ad platforms, Facebook may have been betting that the FHA does not apply to it, or that it was protected by a unique immunity under the Communications Decency Act of 1996. The broad approach of the FHA and the narrowing of the CDA would make that a bad bet.

The FHA generally prohibits housing providers from discrimination based on race, color, religion, national origin, familial status, gender and disability. 42 U.S.C. Section 3604. Many in Facebook's position have tried to argue its inapplicability on the grounds that they are not housing providers, that they neither sell nor rent out any dwelling.

However, whether or not one actually provides housing is irrelevant under the FHA. It prohibits a wide array of discrimination, up and down the chain of housing, from the newspaper ad to the insurance company to the manager to the owner. Given the charges listed by HUD, even though Facebook doesn't directly offer housing itself, its practices still run afoul of many FHA provisions.

For example, the FHA at Section 3604(c) prohibits publishing discriminatory housing advertising. Traditionally, this has applied to newspapers who publish a landlord's ads such as "Christians only" or "no kids." However, the implementing HUD regulation for Section 3604(c) goes even deeper to prohibit "selecting media or locations for advertising the sale or rental of dwellings which deny particular segments of the housing market information about housing opportunities because of race, color, religion, sex, handicap, familial status, or national origin." 24 C.F.R. Section 100.750.

Thus, the content can be facially neutral, and the method of indicating a discriminatory preference subtle, but an ad can still violate the FHA based on the choice of who receives it. This implicates the targeting practices alleged by HUD, described above; Maria and everyone in her group or segment are denied market information. Given the size of Facebook's user base, this likely occurs on a massive scale every day.

Another FHA prong makes it unlawful to represent to any person because of their protected status that any dwelling is not available for inspection, sale, or rental when it is actually available. Section 3604(d). This has occurred in traditional fair housing cases when landlords or real estate agents state falsely to prospective tenants or buyers that they have nothing to show them. Today, this prohibition on "limiting information" applies to Facebook's practice of not showing housing ads to certain groups of people based on protected characteristics. 24 C.F.R. Section 100.80(b)(4).

Assuming HUD has the evidence to back up its many and various allegations, Facebook may seek a defense based on the federal CDA. The CDA protects interactive online service providers against liability arising from their conduct as publishers or speakers of content created by third parties. 47 U.S.C. Section 230(c).

Amid concerns that it fostered a lawless internet, the CDA was for several years believed to be an indestructible shield for Internet service providers such as AOL, Craigslist and Facebook. Courts even upheld its use by dating websites to shield them against defamation and harassment skirmishes among daters.

But there is no Fair Dating Act, and it took a fair housing case to put the first crack in the CDA's shield. In Fair Housing Councils v. Roommates.com, 521 F.3d 1157 (9th Cir. 2007) (en banc), the plaintiffs alleged that the website required users to provide their age, gender, sexual orientation, and familial status. Roommates.com also crafted drop-down menus and pre-populated lists to have the providers of rooms state their preferences in those same categories. Those preferences were used to determine who could access the postings.

The 9th Circuit determined that Roommates.com became "much more than a passive transmitter of information provided by others" when it required users' responses about protected characteristics and then used that information to steer postings, to decide who can access these housing opportunities. Under Roommates.com, a website is not entitled to CDA protection if the entity "contributes materially to the alleged illegality of the content." 521 F. 3d at 1168.

More recently in another housing case, the 9th Circuit affirmed that the CDA does not "create a lawless no-man's-land on the Internet," when it upheld the City of Santa Monica's Home-Sharing Ordinance against assertions of CDA immunity by Homeaway.com and Airbnb Inc. 918 F.3d 676, 683 (9th Cir. 2018).

If HUD's allegations are proven, Facebook is not entitled to CDA protection because it mines data and then actively groups users based on that data. It customizes audiences. It targets them. It has even created the tools such as drop-down boxes, pre-populated lists (also used by Roommates.com), and maps that prompt advertisers to publish discriminatory ads or ad campaigns. Thus, Facebook is contributing materially to the unlawful discrimination alleged by HUD and, to that extent, is not entitled to CDA protection.

"Using a computer to limit a person's housing choices can be just as discriminatory as slamming a door in someone's face," said HUD Secretary Ben Carson when HUD filed the charges against Facebook. There is some irony here as the Trump administration has rolled back fair housing funding and programs, but the issue cannot be stated better. Whatever the Trump administration's reasons are for this rare follow-through on an Obama administration fair housing action, one thing is clear. Half a century later, the FHA still holds up as a law to help stop housing discrimination in the internet era.