Spokeo is a data broker that compiles and sells access to consumer's personal information. It collects this information from offline and online resources, including social media, to create a detailed personal profile. The profile may include an individual's name, address, age range and e-mail address. It may also include hobbies, ethnicity, religion, participation on social media sites and photos.

The FTC alleged that from 2008 until 2010 Spokeo marketed these profiles as an employment screening tool for human resources professionals, job recruiters and others, and sold access on a subscription basis. It also ran online advertisements specifically to attract these parties, and created a special portion of the Spokeo website for recruiters.

In 2010, Spokeo amended the Terms of Service on its website to state that it is not a consumer reporting agency and that its services could not be used for FCRA-covered purposes. However, the FTC alleged that the company failed to revoke access to existing users, including subscribers who may have joined Spokeo through its website for recruiters, or ensure those who had previously purchased access did not use its website or information for FCRA-covered purposes.

The FTC also alleged that Spokeo directed its employees to post comments endorsing the company to news and technology websites under account names that were created by the company to give the impression that they were independent, ordinary consumers.

In its complaint, the FTC found that Spokeo qualified as a "consumer reporting agency" under the FCRA because it provided "consumer reports." Under the statute, a consumer report bears on a "consumer's character, general reputation, personal characteristics, or mode of living and/or other attributes listed in section 603(d), and is "used or expected to be used . . . in whole or in part" as a factor in determining the consumer's eligibility for employment or other purposes specified in section 604 of the FCRA.

The FTC alleged that Spokeo failed to adhere to three key FCRA requirements:

The FTC also separately alleged that Spokeo committed deceptive acts or practices in violation of Section 5(a) of the FTC Act through its deceptive endorsement practices.

Under the terms of the proposed settlement, Spokeo:

The proposed order is subject to court approval.

This case is noteworthy as it is the first FTC case enforcing the FCRA to address the sale of online data, including social media data, in the context of employee screening. It also demonstrates the FTC will enforce the FCRA against a company whose practice is to collect and sell consumer data in a manner prohibited under the FCRA, even where a company does not purport to operate as a consumer reporting agency.