Headquarters for social networking company Facebook Inc. in Menlo Park, California. (Photo: Jason Doiy/ALM)

In a settlement with civil rights and labor groups, Facebook Inc. announced sweeping changes to its ad platform Tuesday to resolve claims that advertisers for housing, employment and credit opportunities targeted the website’s audiences in a discriminatory basis.

The social media giant announced the settlement Tuesday, rolling out changes to how it manages housing, employment and credit ads on its website. The settlement, which will prohibit advertisers from excluding users on a discriminatory basis, was filed in the U.S. District Court for the Southern District of New York.

Facebook reached the settlement after it faced mounting legal pressure from a coalition of civil rights and labor groups and plaintiffs firms. Facebook agreed to work with the groups to monitor implementation of the changes.

The settlement came together after months of negotiations, which began in the spring of 2017 and will resolve at least five lawsuits filed by groups including the American Civil Liberties Union, Communications Workers of America, and the National Fair Housing Alliance.

“Today’s changes mark an important step in our broader effort to prevent discrimination and promote fairness and inclusion on Facebook. But our work is far from over,” said Facebook chief operating officer Sheryl Sandberg in a statement.

Facebook’s key structural change will be creating a separate portal for advertisers hoping to publish housing, employment, credit advertisements, or HEC, on Facebook, Instagram or Messenger. The tech giant will significantly limit those advertisers’ targeting options, eliminating their ability to select audiences based on gender, age, race, religion and sexual orientation. Advertisers will be barred from targeting other groups who are protected under federal, state or local laws.

The platform has also agreed to eliminate ZIP code targeting and will establish a minimum geographic radius of 15 miles from a specific address or the center of a city.

The targeting options will go “down from tens of thousands to just a few hundred,” Galen Sherwin, an ACLU attorney, said during a press call.

Under these changes, advertisers will be asked at the outset to self-certify whether they’re HEC ad creators. If they are, then they will work through the HEC portal, which will limit their set of targeting options. If Facebook detects an HEC advertiser has tried to evade that portal, then the platform will block the advertisement and re-route them to the HEC portal.

Facebook also will begin requiring advertisers to certify their compliance with anti-discrimination laws and Facebook’s own anti-discrimination policies, Sherwin said.

The National Fair Housing Alliance is represented by New York-based civil rights firm Emery Celli Brinckerhoff & Abady. The Communication Workers of America and several individual job-seekers are represented by Outten & Golden and the ACLU.

As part of the deal, Facebook will pay nearly $3 million to CWA to reimburse its legal fees and costs and to the individual who alleged they were denied opportunities on Facebook’s ad platform.

Facebook also agreed to pay the NFHA up to $1,950,000, in damages and attorneys’ fees.

'Wonderful Settlement'

Facebook has faced scrutiny over its ads since ProPublica first published a story in October 2016 that detailed how the company had allowed advertisers to target users based on race. ProPublica showed that it was possible to purchase housing-related advertisements and target them for certain races, excluding Facebook users with certain “ethnic affinities.”

Facebook was subsequently hit with at least five discrimination lawsuits or charges filed with the Equal Employment Opportunity Commission between 2016 and 2018. Attorneys at the Aqua Terra Aeris Law Group and the Law Office of William Most led the way with a lawsuit in the Northern District of California in 2016, representing plaintiffs who said Facebook had allowed ad-purchasers to discriminate against racial minorities.

Outten Golden was brought onto the suit later in 2016 and it began asserting claims on a classwide basis. Facebook initially filed a motion to dismiss, which Outten Golden opposed.

Settlement talks began in spring 2017, said Jahan Sagafi, a civil rights attorney at Outten Golden.

“Those talks have continued through this week and ultimately culminated in the wonderful settlement,” Sagafi said. He described it as a “global settlement” that resolves the California case, as well as four other cases related to gender, age, and the housing discrimination claims.

David Berman, an Emery Celli Brinckerhoff & Abady attorney, said the firm began settlement talks with Facebook in September. He said that, given the way advertising has evolved, settlements like this were important for ensuring that laws protecting certain groups are "updated to fit the new age."