When I first read about this, I felt like it belonged in the “What in the world category.” Facebook has 2 billion active users worldwide and generates 16.6 billion dollars from targeted advertisements. (see link below).
Facebook is being sued by the Housing and Urban Development (HUD) for discriminatory practices in real estate. Specifically, they are being accused of violating the Fair Housing Act of 1968. It is fairly an indirect connection as Facebook helps advertisers narrow their audience based on their demographic data. The initial complaint, filed in 2018 states:
“[Facebook] has provided a toggle button that enables advertisers to exclude men or women from seeing an ad, a search-box to exclude people who do not speak a specific language from seeing an ad, and a map tool to exclude people who live in a specified area from seeing an ad by drawing a red line around that area,” the complaint reads.
The problem is that some targeting of ads is beneficial to both advertisers and Facebook users. A Facebook user does not want to be deluged with advertisements when they use Facebook. I’m not a great Facebook user, but I did video tape a chicken that was loose in our front yard and post it. Catching a chicken can be difficult and timing is everything. (pretty much topic, sorry). Over time, users likely add data such as where they went to school, languages they speak, their interests and other bits of information which helps connect them to connect with others with similar interests. All seeming pretty harmless.
Targeting audiences is nothing new. Amazon does this all the time based on my prior purchases and I’m sure, they have a pretty good idea of my interests. They know I am not interested in books written in Spanish, although I live in Miami. Any time you visit a website, be it this blog, or any other, your browser passes along considerable data including age, where you live (usually city and state), your primary language and general interests. Facebook can tap into a lot of information on their users for marketing purposes.
Generally, it is not in the commercial interests of real estate agents to exclude potentially interested buyers, but they also have a mental profile of who might be the a likely buyer of a home.
Comments by HUD go further as they add Facebook’s platform causes discrimination (from NPR website):
HUD says Facebook does so by “encouraging, enabling and causing housing discrimination” when it allows companies that use their platform to improperly shield who can see certain housing ads.
Why is the US government involved?
In real estate, a company which targets audiences of their ads for potential buyers, is likely to be more successful in selling and renting homes. The accusation against Facebook is they are an “enabler” of real estate agents involved in “redlining.” It can be a tricky line, because sales agents may work with customers with religious or racial bias. It can be particularly tricky in short term rentals. It is not illegal to refuse to rent to someone with pets or who smokes.
The Fair Housing Act was passed to prevent discriminatory practices by real estate agents and lenders. It was signed into law by President Lyndon Johnson on April 12, 1968 just 8 days after the assassination of Martin Luther King. The legislation had been opposed by southern conservative Democrats. All real estate sales agents and brokers are licensed by their respective states, and have to demonstrate their knowledge of the Fair Housing Act as part of their certification exam.
I know personally discrimination was a big problem. My father told me the real estate agents would never show houses in our area to eligible black buyers because they felt it black owners would depress housing values. Today, this would be a blatant violation of the Fair Housing Act. Owners of apartments in Houston, Texas where I lived in the early 1980’s, would routinely refuse to rent to blacks. It was sad, unethical and now illegal.
The southern conservative Democrats in the late 1950’s and early 1960’s were openly racists defended by a state’s rights agenda. They viewed the federal government as meddling in their self governance. When George Wallace, a democrat ran for governor of Alabama in 1962, the Republicans did not nominate any candidate. His inaugural speech included this infamous line:
“In the name of the greatest people that have ever trod this earth, I draw the line in the dust and toss the gauntlet before the feet of tyranny, and I say segregation now, segregation tomorrow, segregation forever.”
Certainly, the Civil Rights bill of 1964 was a great turning point for the progressive faction of the Democratic party, and the beginning of the conservative southern states turning more to the Republican Party. Another great stalwart against equality was Congressman Howard W. Smith from Virginia, who as Committee Chairman of the House Rules Committee, did everything he could to stall of vote on the 1964 Civil Rights bill.
Will HUD win their case?
Facebook said they were surprised at the filing of a lawsuit. They were in the process of working to remedy the complaint. Usually, if there is a complaint, the Department works out some settlement for damages rather than have a court battle. At least that seems the way the Department handles discrimination suits against banks. The case against Facebook is a civil suit, so no one goes to jail. It is against the Facebook corporation, which includes Instagram.
Discrimination is part of consumer rights and never a priority under Trump
There is zero appetite in Trump’s administration for defending victims of violation of the law in consumer rights. This is why Ben Carson is in charge of HUD. He has long
Similarly, Donald Trump appointed as director of CFPB, Mike Mulvaney, an agency. he detests and introduced legislation in Congress to abolish it. It is an agency aimed at protecting consumers in financial areas, such as payday loans and home loans. Mick Mulvaney effectively fired the CFPB Advisory Council, a 25 member group in June 2018. There is little doubt that one reason for the financial collapse in 2008, was consumers were way over their heads in debt, some due to predatory practices of lenders. Mulvaney’s appointment was temporary. Democrats were appalled at his replacement, Kathy Kraninger, who has nearly no experience nor experience in consumer finance and protection. She got the job based on loyalty to Mulvaney and will likely continue to continue the strategy of slowly weakening the Bureau’s activities until it makes no sense to fund it. An enormous loss for consumers. It’s called death by 1,000 cuts.
Ben Carson – Champion of the Obama era rollback
I believe the Verge website nailed it, with their headline, “When did Ben Carson start to care about the Fair Housing Act?” . Their posts demonstrates Carson’s extreme conservative positions:
We are not used to seeing robust regulation of tech companies here in this country, particularly not from HUD, which is currently run by a man who once said that the Affordable Care Act was “the worst thing that has happened in this nation since slavery.” A year ago, the New York Times found that HUD was scaling back Obama-era enforcement of fair housing laws.
From the New York Times article:
The Trump administration is attempting to scale back federal efforts to enforce fair housing laws, freezing enforcement actions against local governments and businesses, including Facebook, while sidelining officials who have aggressively pursued civil rights cases.
The policy shift, detailed in interviews with 20 current and former Department of Housing and Urban Development officials and in internal agency emails, is meant to roll back the Obama administration’s attempts to reverse decades of racial, ethnic and income segregation in federally subsidized housing and development projects. The move coincides with the decision this month by Ben Carson, the secretary of housing and urban development, to strike the words “inclusive” and “free from discrimination” from HUD’s mission statement.
Wow! I’ve included the Verge article and the New York Times.
The federal government spends billions of dollars on a program to fund 12,000 communities to improve their services in education, transportation and other areas But in return, these communities had to show progress they were desegregating community services such as transportation and schools using a tool developed by HUD. It sounds like a great program. Carson eliminated this requirement and was sued. The courts upheld Carson’s decision, “Federal judge dismisses …”. He claims that he eliminated this rule, so the Department can come up with a better one. Yeah, like no funding at all.
Trump’s dislike for the Fair Housing Act
Donald Trump (President of Trump Management Co) and his father, Fred Trump (CEO) were found in violation of the Fair Housing Act in 1972 by the US Department of Justice, – Civil Rights Division. The division sent both black and white applicants to the New York apartments and found blacks or people on welfare were routinely rejected. It took time to build a case against them. They were coding application forms so they knew whether applicants were black. They told rental agents not to rent to blacks. They signed a “consent decree”with the Department of Justice to end the legal action. See Wikipedia link.
Effect of HUD lawsuit on Facebook and others
The stock price of Facebook actually has increased a bit since the announced lawsuit. It is likely investors feel that Facebook has a good chance to prevail or settle the case without much financial impact. It is ironic that if the case is decided by a conservative judge, which narrowly interprets the Fair Housing Act, the whole lawsuit might be thrown out. Many other companies, such as Google will want a quick settlement. A settlement always allows both sides to claim victory.
In sum, I think this lawsuit is just an election campaign ploy. Facebook has weathered some pretty enormous scandals on leaked information, and so it is tainted goods at this point. But this hardly effected investors interest in the company as it is up around 30% for the year, verses 14% for the overall market (S+P index).
NYT, Mar 28, 2018, Under Ben Carson, HUD Scales Back Fair Housing Enforcement
Ben Carson, the secretary of housing and urban development, on a housing tour last year in Columbus, Ohio. This month, he struck the words “inclusive” and “free from discrimination” from his department’s mission statement.
The Verge: Why HUD’s lawsuit against Facebook came as a surprise: When did Ben Carson start to care about the Fair Housing Act?
Kudos to Casey Newton, for a well researched post with relevant links.
Federal judge dismisses lawsuit accusing HUD Secretary Ben Carson of dismantling Obama-era fair housing law
Federal aid will continue to 12,000 urban communities to improve their neighborhoods without any checks on efforts to desegregate schools, transportation and other community services.
Washington Post: HUD is reviewing Twitter’s and Google’s ad practices as part of housing discrimination probe
May 17, 2018, Washington Post, HUD Secretary Ben Carson to be sued for suspending Obama-era fair-housing rule
Mick Mulvaney isn’t blowing up the CFPB, It’s more like death by a thousand cuts, critics say.
Mick Mulvaney Effectively Fires CFPB Advisory Council