Lawsuits challenge U.S. online data brokers

Thu Feb 24, 2011 6:13pm GMT

By Terry Baynes

NEW YORK Feb 24 (Reuters Legal) - Two lawsuits in federal court in California that challenge the way a popular online data-mining company does business could give consumers more privacy protection from firms that sell personal information on the Web.

In the most recent complaint, filed last week in the Central District of California, plaintiff Thomas Robins alleged that Spokeo Inc. violated the Fair Credit Reporting Act by offering false data about individuals without giving them the chance to correct or remove inaccurate reports.

The suit alleged that Robins' Spokeo profile was rife with misinformation, stating that he was in his 50s, married with children and employed in a professional field. Robins is actually in his 20s, single and has no children. He argued that such false representations have hurt his employment prospects, causing him anxiety and lost earnings.

In a similar suit filed in September in the Northern District of California, plaintiff Jennifer Purcell alleged that Spokeo marketed her personal information in violation of the FCRA, which restricts who can access personal information. Both Robins and Purcell are seeking class-action status for their cases.

The lawsuits reflect efforts by privacy advocates to gain some measure of control over the data aggregators like Spokeo, which have proliferated. The Privacy Rights Clearinghouse lists over 130 online data vendors on its website, including Intelius, Jigsaw and Peek You.

Online data brokers are "pushing the envelope," according to Justin Brookman of the Center for Democracy & Technology, a consumer-advocacy group that has filed a complaint against Spokeo, one of the most well known sites, with the Federal Trade Commission.

PROVING ACTUAL HARM

Robins and Purcell face the challenge of proving actual harm -- a heavy burden in privacy cases where the damage is seldom tangible.

John Nadolenco, a lawyer for Spokeo, said Robins "is just worried that he won't be able to find a job. But so are a lot of unemployed people. I don't think it's sufficient to confer injury."

Nadolenco said that an Internet search engine like Spokeo is not what Congress had in mind when it passed the FCRA in the 1970s to regulate credit bureaus like Equifax and TransUnion. "Spokeo is not in the business of issuing consumer reports," Nadolenco said. "It's a search engine that runs an algorithm and finds stuff about people."

In the same way that YouTube and Facebook cannot be liable for defamatory third-party content under the Communications Decency Act, Spokeo cannot be held liable for assembling personal information about people from phone books, real estate listings, government records and social networking sites, Nadolenco said.

But the plaintiffs claim that Spokeo is doing more than simply aggregating publicly available content. The site draws conclusions about people's lifestyle choices, according to Robins' complaint, with descriptors like "seeks opportunity" and "cares about healthy living." The site's premium section offers reports about an individuals' "economic health," previously dubbed "credit estimate," according to the complaint.

'ASSERTIONS ABOUT ECONOMIC HEALTH'

Offering credit and financial information has made Spokeo a desirable target for plaintiffs' lawyers. Robins' lawyer Christopher Dore said that while other companies follow the same model of collecting personal information from various sources without verifying its accuracy, Spokeo makes "assertions about people's economic health, and that is problematic."

Spokeo's website includes a disclaimer that the information provided could be incorrect. Each search results page also includes a notice that none of the information should be used to determine a person's eligibility for credit, insurance, employment or any other purpose covered by the FCRA.

But Robins' complaint alleged that Spokeo has marketed its services to human resource professionals, law enforcement agencies and entities performing background checks. Nadolenco said Spokeo vigorously disputes those allegations.

In its complaint, filed in July, the Center for Democracy & Technology alleged that Spokeo was offering detailed consumer information that could affect decisions about credit, insurance and employment without complying with the FCRA.

"Their profiles were by and large free, and often wildly inaccurate. They'd make sweeping conclusions about you from little data or inaccurate data," Brookman said. Like Spokeo, most data brokers argue that they operate outside the purview of the FCRA with little pushback from regulators. "There's a fair amount of uncertainty about where the line lies," he said.

(Reporting by Terry Baynes of Reuters Legal; Editing by Amy Singer)

(This article first appeared on Westlaw News & Insight, www.westlawnews.com)

((terry.baynes@thomsonreuters.com; +1 646 223 8022)) Keywords: ONLINE/PRIVACY

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