In 2018, the U.S. Department of Housing and Urban Development ("HUD") brought an administrative charge of discrimination against Meta (then Facebook), alleging it allowed advertisers of housing and related services on its platform to target specific demographic groups and thereby facilitating discrimination against prospective homebuyers and renters.  

The charge (and subsequently filed complaint in the Southern District of New York) alleged that Meta provided advertisers with a series of functionalities that allowed advertisers to select an ad’s targeted audience for ads on the platform.  Primarily, these functionalities consisted of a series of drop-down menus that allowed advertisers to target users based on particular targeting options including options such as race, gender, religious affiliation, age, language, marital status, and expat status.  Meta also provided advertisers the ability to target users based on the type of ad, such as ads for housing opportunities. In addition, Meta provided advertisers with a “map tool” that allowed advertisers to target users who lived in a specified area and either include or exclude such users from seeing an ad by drawing a red line around that area. This map tool also allowed advertisers to group users by zip codes and either include or exclude users associated with specific zip codes from seeing the ad.  

After an advertiser used the above-listed tools to select a target audience, Meta would create a "lookalike audience" (later called a "Special Ad Audience") by selecting from among the users eligible to see an ad based on inferences and predictions that Meta would draw about each user’s likelihood to respond to the targeted ad.  HUD claimed that by creating these groupings based on various presumptions, Meta's targeting mechanisms "function just like an advertiser who intentionally targets or excludes users based on their protected class," in violation of the Fair Housing Act.

In June of 2022, Meta and the federal government reached a settlement in connection with HUD's charge and complaint.  Under the settlement, Meta agreed to allow Meta's Special Ad Audience tool to expire and to pay a penalty of more than $115,000.  In addition, Meta also agreed to create a new tool, referred to as a "Variance Reduction System," to handle housing ads. In January of 2023, the U.S. Department of Justice told a New York federal judge that the parties had reached a follow-up agreement on compliance targets, in which Meta will be subject to court oversight and regular review of its compliance with the settlement through June 27, 2026.

The takeaway?  Just because a platform offers tools to target audiences for ads doesn't necessarily mean that such tools are legal.  When considering targeted ads, and the legality of such targeting, it's important to consider the types of tools that a platform may offer as well as the type of ad for which the tools may be used.  When in doubt, consult counsel.