March 28 (UPI) -- U.S. housing regulators charged Facebook Thursday with violating federal law with targeted ads that promote houses based on criteria that include race and income level.
The U.S. Department of Housing and Urban Development said Facebook uses discriminatory practices to determine who sees housing advertisements. According to the complaint, Facebook mines user data and builds profiles to choose which ads they should see, including homes for sale. HUD also accuses Facebook of drawing a red line around certain neighborhoods so people who live there won't see the homes.
The charges also accuse Facebook of excluding certain other demographics that violate protection clauses in the Fair Housing Act.
"HUD claims Facebook combines data it collects about user attributes and behavior with data it obtains about user behavior on other websites and in the non-digital world," the agency said. "Facebook then allegedly uses machine learning and other prediction techniques to classify and group users to project each user's likely response to a given ad, and in doing so, may recreate groupings defined by their protected class."
The department seeks to address unresolved fair housing issues and provide relief, including punitive damages.
The federal charges come a week after Facebook agreed to overhaul its micro-targeting ad system for jobs, housing and loans after several discrimination complaints -- and news that the social network exposed passwords to millions of accounts to company employees.
Facebook said it didn't anticipate the move Thursday.
"We're surprised by HUD's decision, as we've been working with them to address their concerns and have taken significant steps to prevent ads discrimination," a spokesperson told Yahoo Finance.
"While we were eager to find a solution, HUD insisted on access to sensitive information -- like user data -- without adequate safeguards. We're disappointed by today's developments, but we'll continue working with civil rights experts on these issues."