Data broker Spokeo Inc. will pay $800,000 to settle a Federal Trade Commission lawsuit that alleged the Pasadena company illegally sold personal information.
Spokeo collects and aggregates data such as home addresses, email addresses and telephone numbers from public records and social media sites. It compiles that information into profiles, which it sells to subscribers.
The FTC's statement on the settlement said the company sold data to businesses "in the human resources, background screening and recruiting industries" in violation of the law.
Until 2010, Spokeo marketed its services to employers and recruiters. It had a tab labeled Recruiters prominently displayed on its website, on which it encouraged users to Explore Beyond the Resume.
The FTC said the company violated the Fair Credit Reporting Act — which regulates consumer reporting agencies — by failing to ensure that the information was accurate, not telling users about its obligations under the law and failing to notify job seekers when employers decided not to hire them based on the data provided.
"This is the first commission case to address the sale of Internet and social media data in the employment screening context," said the FTC in the statement.
The FTC also accused Spokeo of posting deceptive endorsements of the service, "portraying the endorsements as independent when in reality they were created by Spokeo's own employees."
Spokeo founder and President Harrison Tang wrote on the company's website Tuesday that the company has made changes to its website and business to make sure it is not violating any laws "and to ensure an honest and transparent service that will continue to be easy for our customers to use."
"As we continue to provide new innovations within the people search industry, we are committed to making clarity and transparency top priorities for our customers," Tang wrote.