Deceptive Endorsements: Spokeo and the FTC

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There’s been a lot of focus in the $800,000 Spokeo settlement with the U.S. Federal Trade Commission (FTC) on alleged violations of the Fair Credit Reporting Act (FCRA).

However, it’s important to note that the FTC also went after Spokeo for purportedly engaging in deceptive trade practices with regard to endorsements. This is a big no-no, particularly after the FTC’s revised guidelines concerning endorsements and testimonials went into effect on December 1, 2009.

Here’s what the FTC had to say about Spokeo endorsement issue…

The FTC also alleged that Spokeo deceptively posted endorsements of their service on news and technology websites and blogs, portraying the endorsements as independent when in reality they were created by Spokeo’s own employees. In addition to imposing the $800,000 civil penalty, the FTC’s settlement order bars Spokeo…from making misrepresentations about its endorsements or failing to disclose a material connection with endorsers.

As an Internet lawyer, I see this issue all the time even though the FTC has made it clear that you can’t engage in a campaign of deceptive endorsements and testimonials. Expect the Federal Trade Commission to continue making examples until companies finally “get it” that such misbehavior is anti-consumer.

Are Social Media Employment Background Checks Legal?

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social media employment background checks

What do you think of social media employment background checks?

FTC and Social Media Employment Background Checks

When it comes to social media employment background checks, the Federal Trade Commission (FTC) has indicated that it plans to hold employers gaining information about potential employees over the internet subject to the same accountability as employers who obtain information about prospective employees in more traditional ways.

This means, among other laws and regulations, that social media employment background checks must comply with the Fair Credit Reporting Act (FCRA).

As the consumer protection branch of the federal government, the FTC works in part to protect the privacy and reputation value inherent in people’s names. This protection has extended to the FTC enforcing regulations whereby employers must do diligent research into the accuracy of data provided to them about potential future employees.

Traditionally, this research extended to ensuring the accuracy of official reports, like criminal history and previous employment statistics, but recent guidance by the Federal Trade Commission indicates that the FTC is looking at how employers make use of information on the internet.

Why Social Media Employment Background Checks Are Popular

Some companies make money by researching the backgrounds of individuals, and then selling the results of social media employment background checks to prospective employers who may hire those individuals. Employers value this information and are willing to pay money to know how successful potential employees might be with their company. Much of the information sold to employers by information gathering companies comes from internet websites such as Facebook, Linkedin, MySpace, and Twitter.

While often employers can learn a good deal about a job applicant by viewing his or her posts on the Internet, there are concerns about the accuracy of data provided to employers gathered this way. For example, online identity theft could, if undiscovered or not disrupted, cause employers to rely upon false information to reject a prospective employee.

The FTC recognizes this possibility and wants employers and their information providers to take additional steps to ensure that a potential employee is not rejected for a position because online identity theft tainted social media employment background checks.

Social Media Employment Background Checks and Identity Theft

Although FTC conditional approval of social media employment background checks does nothing to stop online pirates from stealing the identity of others, it does encourage employers to make sure information given to them is accurate. Online identity theft may always exist, but now employers know that the FTC may punish them for not verifying data used by them for hiring purposes is reasonably certain to be accurate.

Companies providing data to employers must also take heed of the FTC’s views. The Federal Trade Commission wants these research organizations to ensure that the data they provide to employers will not be used in a way contrary to the law. Responsibility, therefore, on the part of both employers and research businesss providing them with the social media employment background checks, will perhaps lead to greater data accuracy albeit at the expense of a prospective employee’s privacy.

Of course, there remains the unresolved issue of whether sites like Facebook will be held liable by the government or in civil lawsuits for damages if they sell false information to businesss who use it for social media employment background checks.

What Is The Federal Trade Commission?

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The Federal Trade Commission is a large government agency that employs investigators, attorneys, and administrative law judges. It is headed by five Commissioners who serve 7-year terms after being nominated by the President and conbusinessed by the U.S. Senate.

By judicial precedent (prior court decisions), statutes, and regulations, the FTC’s authority to act on behalf of consumers against you is extremely broad. Responsible for enforcement and administrative duties under 46 statutes, here are a few of the major laws that the FTC relies upon.

* Federal Trade Commission Act

* Consumer Leasing Act

* Electronic Funds Transfer Act

* Equal Credit Opportunity Act

* Fair Credit Billing Act

* Fair Credit Reporting Act

* Fair Debt Collection Practices Act

* Magnuson-Moss Warranty Act

* Truth in Lending Act

* CAN-SPAM Act