A California state appeals court recently ruled that Facebook can be sued over alleged discriminatory advertising practices. The case stemmed from a 2020 class action suit claiming Facebook violated civil rights laws by excluding insurance ads targeting women and older individuals.
Facebook Faces Possible Lawsuit
Facebook is facing the possibility of a lawsuit regarding claims of discriminatory practices in its advertising algorithm, as ruled by a California state appeals court last week.
The Verge reported that this development originates from a class action lawsuit against Facebook in 2020, asserting that the company violated civil rights laws by omitting insurance advertisements for women and older individuals.
At the heart of this legal battle is Samantha Liapes, a 48-year-old woman who used Facebook for searching insurance options. The lawsuit contended that Facebook's ad distribution mechanism failed to display insurance ads to Liapes based on her age and gender.
In a September 21 ruling, the appeals court overturned a previous judgment that had invoked Section 230, which provides legal protection to online platforms in cases involving illegal user-generated content.
The appeals court determined that the case presents a sufficient argument that Facebook was aware of insurance advertisers deliberately directing their ads toward users based on age and gender, thereby violating the Unruh Civil Rights Act.
Facebook's ad algorithm has been intensely scrutinized for several years. A federal lawsuit was filed in 2018 and accused the company of enabling housing discrimination.
Subsequent studies provided evidence to support these allegations. In 2022, Facebook settled with the US government and rolled out a new ad distribution system to tackle housing discrimination.
California Ruling
The appeals court recently determined that a previous court made a mistake in its judgment by granting Facebook immunity under Section 230 of the Communications Decency Act.
As indicated in its press release, this section usually shields interactive websites from liability concerning third-party content.
Moreover, the appeals court concluded that the accusations were substantial enough to allow the case to advance, asserting that Facebook's advertising targeting and delivery mechanisms exhibited discriminatory behavior and potentially facilitated advertiser-led discrimination.
Facebook has developed an advertising platform enabling businesses to tailor ads to particular user demographics. According to Liapes, Facebook employed various tools, some influenced by advertiser input and others not, that exhibit differential treatment towards users based on protected attributes.
She argued that this constitutes a violation of California's Unruh Civil Rights Act in the context of insurance-related advertisements.
The verdict from California's First District Court of Appeal corresponded with the positions advocated by the Lawyers' Committee For Civil Rights Under Law, the American Civil Liberties Union (ACLU), ACLU of Southern California, ACLU of Northern California, and Upturn in their brief.
These organizations contended that Facebook's actions constituted discrimination and were detrimental, particularly in light of the insurance industry's long-standing track record of bias against women, older individuals, and marginalized communities.
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