WASHINGTON — The Department of Housing and Urban Development sued Facebook on Thursday for engaging in housing discrimination by allowing advertisers to restrict who is able to see ads on the platform based on characteristics like race, religion and national origin.
In addition to targeting Facebook’s advertising practices, the housing department, known as HUD, claims in its lawsuit that the company uses its data-mining practices to determine which of its users are able to view housing-related ads. On both counts, the agency said, Facebook is in violation of the federal Fair Housing Act.
“Facebook is discriminating against people based upon who they are and where they live,” Ben Carson, the housing secretary, said in a statement announcing the lawsuit. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”
The lawsuit coincides with a broader push by civil rights groups to scrutinize whether big technology companies are reinforcing real-world biases online by using algorithms to identify and target specific groups of users. Facebook has drawn particular attention since it became clear that its ad-targeting technology, which helps marketers narrowly focus their efforts to reach potential customers, 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.
The Silicon Valley company tried to counter the furor over its role in the 2016 race by taking steps to prevent the same thing from happening in the 2018 midterm elections. But 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 Ian Schafer, an advertising industry veteran and a founder of Kindred, a social influence and impact start-up. “The fact that you can do that doesn’t always mean that it can have a good or popular outcome.”
HUD has also begun scrutinizing the actions of other tech companies, according to an administration official with direct knowledge of the matter, who requested anonymity because the official was not authorized to speak publicly. HUD officials recently drafted letters to executives at Google and Twitter asking them if they would be willing to have discussions on a range of issues relating to fair housing, the person said. The Washington Post had reported earlier that other tech companies were also being examined by the agency.
Facebook, which HUD said controlled about 20 percent of the online advertising in the United States, appeared to be taken aback by the suit.
“We’re surprised by HUD’s decision, as we’ve been working with them to address their concerns and have taken significant steps to prevent” ad discrimination, the company said in a statement. It added that it had been negotiating with the housing agency over the issue, but that the talks had broken down because federal officials were seeking access to too much user information “without adequate safeguards.”
Just this month, Facebook noted, it had removed the advertisers’ ability to target housing, credit and jobs ads by age, gender, ZIP code and other characteristics in ways that could be considered discriminatory. Federal law explicitly prohibits advertising, including online, from discriminating in those categories. The social network also recently settled a lawsuit filed by the National Fair Housing Alliance, the American Civil Liberties Union and other civil rights organizations over its advertising practices.
A Twitter spokesman said the company “doesn’t allow discriminatory advertising on our platform.” A Google spokesman said, “We’ve had policies in place for many years that prohibit targeting ads on the basis of sensitive categories like race, ethnicity, religious beliefs, disability status, negative financial standing, etc.”
The housing agency’s suit underscores how effective Facebook’s ad-targeting tools are, and how they could perpetuate discriminatory behavior if used by those who want to exclude people based on race, religion, gender or other criteria.
Facebook collects a vast amount of information about its users, and uses its technology to draw additional inferences about them. In its pitch to advertisers, the complaint says, the company notes that “most online advertising tools have limited targeting options” including “age, gender, interests and potentially a few others.” But, the pitch continues, “Facebook is different. People on Facebook share their true identities, interests, life events and more,” according to the complaint.
The complaint also accuses Facebook of going further than advertisers may ask in targeting users. The company’s “ad delivery system will not show the ad to a diverse audience if the system considers users with particular characteristics most likely to engage with the ad,” the complaint says, even if an advertiser wants the ad to be seen broadly by users.
“If the advertiser tries to avoid this problem by specifically targeting an unrepresented group, the ad delivery system will still not deliver the ad to those users, and it may not deliver the ad at all,” the complaint says.
The complaint does not name any advertisers who used Facebook’s targeted ad tools.
HUD’s lawsuit follows nearly three years of scrutiny of Facebook’s ad-targeting practices that started with a 2016 investigation by ProPublica, whose reporters showed that the company made it simple for marketers to exclude specific ethnic groups for advertising purposes.
Those who chose to could buy ads that excluded ethnic “affinity groups” like African-Americans, Asian-Americans and Hispanics in Facebook’s housing advertising category.
Within HUD, the lawsuit caps a long-running debate over whether and how to discipline Facebook.
In 2017, Mr. Carson’s aides scaled back an inquiry into the company’s housing-ad policies, going so far as to scrap a long-scheduled negotiating session with Facebook officials soon after the Trump administration took office.
The investigation slowed even further after the appointment of Anna Maria Farías as assistant secretary for fair housing and equal opportunity in mid-2017, according to current and former federal officials.
Ms. Farías, a former Republican Party official from Texas, dialed back all of the department’s fair-housing enforcement activities, sending Facebook a one-page letter ordering, without explanation, the termination of a preliminary investigation into the company’s advertising practices shortly after she took office.
Ms. Farías, according to six department officials, told HUD managers that she intended to replace her top subordinate, Timothy Smyth, who had overseen the Facebook case and other high-profile actions, including an investigation into the City of Houston.
Ultimately, she reversed course, and Mr. Smyth retained a position of authority in the department.