Business

Facebook to end targeted ads for jobs, housing, loans after bias complaints

WASHINGTON — Facebook on Tuesday agreed to overhaul its lucrative targeted advertising system to settle accusations that landlords, lenders, and employers use the platform to discriminate against African-Americans, women, seniors, people with disabilities, and others.

The far-reaching settlement compels Facebook to withhold a wide array of detailed demographic information — including ZIP codes, gender, and age — from advertisers when they market housing, credit, and job opportunities.

Although the settlement is unlikely to deal a major blow to Facebook’s bottom line, the change represents a significant shift for a company that has built one of the most successful advertising platforms in history.

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Facebook has long allowed advertisers to target potential customers and employees based on their demographics and interests, as gleaned from the vast trove of data the platform collects. Now, the social media giant is stepping away from that approach, amid mounting evidence that its microtargeting techniques were abused.

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Civil rights advocates have warned for years that Facebook’s ads violated antidiscrimination laws, because advertisers were able to use that data to exclude specific groups of people. The Justice Department allowed a lawsuit to proceed last year over Facebook’s objections, arguing that the company can be held liable for ad-targeting tools that deprive people of housing offers.

Until now, the company had made only minimal tweaks to its systems and largely resisted calls for change, arguing that the ads were standard in online advertising.

Tuesday’s announcement will require a major overhaul of Facebook’s software and could make the platform less valuable to certain advertisers. Many companies use Facebook to recruit workers. Facebook said it will make the changes by the end of the year.

‘‘We are fully taking all the steps we can to protect people from discrimination on our platform,’’ said Sheryl Sandberg, chief operating officer. ‘‘We believe this settlement goes not just to [the letter of] the law but beyond the law in taking very, very strong action to make sure any discrimination doesn’t happen.’’

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The settlements resolve lawsuits and other legal challenges filed in recent years by the National Fair Housing Alliance, American Civil Liberties Union, Communications Workers of America, and others. The company is paying out less than $5 million to the parties.

The settlements arrive as Facebook faces growing scrutiny from regulators, lawmakers, and the public. It’s being investigated by the Federal Trade Commission, the Securities and Exchange Commission, and several state attorneys general over the Cambridge Analytica data privacy controversy.

‘‘This type of discrimination that we thought was stamped out in the sixties and seventies by our civil rights laws should not be given a new life in the digital era,’’ said Galen Sherwin, a senior ACLU staff attorney. ‘‘This settlement establishes that the Web is not a civil-rights-free zone.’’

Federal housing law prohibits discrimination based on race, color, religion, national origin, gender, disability, and family status. Facebook said the new platform will also prevent advertisers from discriminating based on sexual orientation, age, ethnicity, and other characteristics covered by state and local laws.

Housing groups sued Facebook last March, alleging it created pre-populated menus for advertisers that made it easy to block people with disabilities or families with children from seeing rental or sales ads.

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Facebook used terms such as ‘‘English as a second language,’’ ‘‘disabled parking permit,’’ or ‘‘Telemundo’’ — which advocates argue are proxies for protected categories of people.

The housing groups conducted investigations in San Antonio, Texas, Miami, and other cities, creating ads that excluded families with children, women, the disabled, African-Americans, Hispanics, and people with certain national origins — all without consumers ever knowing they had been excluded.

The ACLU and other groups filed a complaint in September with the Equal Employment Opportunity Commission, accusing Facebook of enabling discriminatory job postings. Some firms, for example, were targeting ads only to people under age 45.

The legal efforts followed a ProPublica investigation that found Facebook allowed advertisers to exclude African-Americans, Latinos, and Asian-Americans. While Facebook later said it would bar housing, employment, and credit ads that discriminate based on ‘‘ethnic affinity,’’ it continued to allow other forms of discriminatory targeting, including gender and disability, civil rights groups alleged.

The company signed a legally binding pledge in July promising it would no longer allow advertisers to discriminate, as part of a settlement with the attorney general of Washington state. As part of the pledge, Facebook removed thousands of additional targeting categories.

Tuesday’s announcement goes much further. The new advertising platform will introduce technological barriers to companies promoting housing, employment, and credit ads from significantly restricting their intended audience.

No longer will they be able to target — or exclude — users based on religious and political views or ZIP codes, which advocates argue serve as a proxy for race. Advertisers will still be able to target by location, with a minimum geographic radius of 15 miles.

Facebook also pledged to make its advertising more transparent by giving users the ability to search all housing-related ads regardless of whether users have received the ads in their individual news feeds.

Facebook is still addressing a separate complaint from the Department of Housing and Urban Development, which has accused the company of enabling illegal housing discrimination.