US Penalizes Online Company in Sale of Personal Data

The Federal Trade Commission assessed an $800,000 penalty against Spokeo, a data collector that the FTC 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 FTC’s first case addressing the sale of Internet and social media data for use in employment screening.

Spokeo, of Pasadena (CA), agreed to settle the civil charges without admitting that they were true. The trade commission said 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 ensure their accuracy and neglecting to tell consumers of its own responsibilities under federal law.

The FTC also charged that Spokeo created fake endorsements of its service and posted those comments on news and technology Web sites and blogs. The commission said the comments were made up by Spokeo’s own employees.