Facebook Sued For Discriminatory Financial Services Ads

Facebook Inc. FB was sued in a potential class action in San Francisco court for age and gender discrimination on Oct. 31.

What Happened

The lawsuit claims Facebook continues to allow financial services advertisers to “target” potential customers by age and gender, despite implementing restrictions to other types of ads including real estate and employment.

Facebook’s conduct of allowing financial services advertisers discriminate older and female users are against California state laws, according to the complaint, which could result in billions of dollar in compensations to affected users in the United States.

Why it Matters

The suit is the latest legal issue in a long line of accusations that Facebook permits advertisers to discriminate on its platform.

In March 2018, the National Fair Housing Alliance alleged in a lawsuit that Facebook’s services allow advertisers to exclude women and families with children to see their ads. It also said the targeting tools allowed advertisers to exclude people by national origin and disability status.

In March of this year, the U.S. Department of Housing and Urban Development also sued Facebook for permitting advertisers to limit consumers who can see their ads by race, religion, and national origin.

What's Next

In response to the complaints, Facebooksaid in March that it would start overhauling its ad targeting tools to discourage advertisers from discriminatory practices. Chief Operating Officer Sheryl Sandberg confirmed during the company’s recent third-quarter earnings call that the company has started changing how housing ads are done on its platform, warning that “these changes could have a small negative impact on our business in the short term.”

Sandberg said Facebook expects revenue to decelerate in the fourth quarter compared to the third quarter due to “the lapping of several successful product optimizations in the fourth quarter of last year, as well as ad targeting related headwinds.”

Facebook's stock traded 1.81% higher on Oct. 31. Year-to-date, the stock is up 46.4%.