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Capital One, Enterprise Ensnared in Facebook Ad Bias Scandal

Sept. 25, 2019, 1:19 AMUpdated: Sept. 25, 2019, 2:15 PM

The U.S. Equal Employment Opportunity Commission is pursuing allegations that several of Facebook’s advertisers broke the law by restricting job postings on the social network to people of certain ages or genders. The agency joins the Department of Justice and the Department of Housing and Urban Development in probing the realm of so-called digital discrimination.

In a series of July letters, the acting director of the EEOC’s Washington field office informed seven companies—including Capital One Financial Corp. and Enterprise Rent-A-Car’s parent Enterprise Holdings—that the agency had found “reasonable cause” to believe they violated federal anti-discrimination law.

The letters, copies of which were reviewed by Bloomberg, said EEOC investigations established that Enterprise and Capital One each “advertised on Facebook, with national exposure, and when doing so...used language to limit the age of individuals who were able to view the advertisement.”

EEOC letters usually trigger settlement negotiations, and in this case are the latest sign of legal and reputational risk faced by companies that rely on targeted online recruitment ads. They also indicate that the larger controversy didn’t end when Facebook agreed earlier this year to overhaul its policies as part of a settlement.

“It’s problematic to exclude a category of individuals from seeing” employment ads, said Jenny Yang, who chaired the EEOC under President Barack Obama. “It suggests an intent to discriminate against those individuals who you exclude.”

Enterprise and Capital One didn’t respond to requests for comment. The companies have denied any wrongdoing, the EEOC letters stated. Investment advisory firm Edward Jones, also a recipient of an agency letter, said “we strongly disagree with the claim that our firm engaged in discriminatory practices in advertising of job opportunities, recruiting or hiring.”

Facebook, which isn’t accused of any impropriety in the letters, declined to comment on the letters.

Sheryl Sandberg
Photographer: Andrew Harrer/Bloomberg

As part of its settlement in March, which resolved a string of lawsuits and complaints from groups including the American Civil Liberties Union, Facebook pledged that it would no longer allow ads for housing, employment or credit-related products to be targeted at particular users by age, gender or zip code. Facebook’s chief operating officer, Sheryl Sandberg, called the changes “an important step in our broader effort to prevent discrimination and promote fairness and inclusion on Facebook.”

The company had previously defended posting some targeted job ads. In a 2017 statement, then-Facebook Vice President of Ads Rob Goldman compared age-targeted online employment listings with ads that are placed in magazines or on TV shows favored by certain demographics. He said that, when used responsibly, such targeting “helps employers recruit and people of all ages find work.”

Absent a settlement with Capital One, Enterprise, or other advertisers, the EEOC or the plaintiffs could eventually file lawsuits in federal court.

The matter concerns Facebook advertisements from 2017 or 2018, prior to the social media giant’s pledge to revise its ad policy. The EEOC letters were sent following dozens of claims filed last year by the Communications Workers of America union. The CWA said it expects the regulator will pursue other Facebook advertisers. The EEOC declined to comment on the letters or the status of other probes.

“The EEOC clearly did not have a hard time concluding that denying people access to job advertisements based on their age or gender is a discriminatory practice that the law prohibits,” said Peter Romer-Friedman, an attorney with the law firm Outten & Golden. He represents plaintiffs both in the pending EEOC complaints and the now-settled litigation against Facebook. “There has been a systemic problem with national employers using those tools to exclude people from recruiting.”

Last year, the Justice Department filed a “statement of interest” urging a judge to allow a Fair Housing Act lawsuit to proceed against Facebook over housing ads (the lawsuit later settled). The Department of Housing and Urban Development also filed an administrative action against the company about housing-related ads, a matter which is still pending.

Along with its pursuit of Facebook advertisers, CWA said it hopes the EEOC will explore how Facebook’s algorithm could contribute to bias, a topic Facebook has also committed to study.

CWA has previously sued Amazon.com Inc. and T-Mobile in San Jose federal court, accusing both companies of committing age discrimination by restricting employment ads on Facebook to target younger workers. Both companies have denied wrongdoing. In a July motion to dismiss, attorneys for the retailer and the telecom company wrote that, if the plaintiffs’ theory prevailed, “employers could be prohibited from placing job ads in Seventeen Magazine.” By enforcing the federal age discrimination law, they wrote, “courts uniformly focus on what an ad says, not who receives it.”

“All workers deserve a fair chance to get a good job,” Sara Steffens, the secretary-treasurer of the CWA, said in a statement. “The EEOC’s rulings should send employers a strong message that they can’t unfairly lock workers out of opportunities based on their gender or age.”

Employees of Bloomberg Law are represented by the NewsGuild, a sector of the CWA.

© 2019 Bloomberg L.P. All rights reserved. Used with permission.

(Updates with Edward Jones in sixth paragraph.)

To contact the authors of this story:
Josh Eidelson in Palo Alto at jeidelson@bloomberg.net

Paige Smith in Arlington at psmith@bloomberglaw.com

Jaclyn Diaz in Arlington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story:
David Rovella at drovella@bloomberg.net

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