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August 20, 2014 Articles

The Real Estate Industry Must Be Cautious with Social Media

Accessing an applicant's online presence could get a lender or agent in legal trouble.

By Katherine F. Cser

The rising number of states enacting laws limiting employer access to the social media accounts of employees and job applicants should have the real estate industry, which is covered by the Fair Housing Act and local human rights laws, paying close attention to its own social media practices.

The FHA and Social Media

The Fair Housing Act (FHA) prohibits certain housing providers from discriminating against individuals on the basis of their race, color, religion, sex, handicap, familial status, or national origin. 42 U.S.C. § 3604. Individuals’ social media profiles frequently highlight some of these protected characteristics. According to a Carnegie Mellon study, between a tenth and a third of U.S. firms consult social media sites before making a hiring decision, and some job applicants were denied interviews on the basis of their affiliation with a protected category. The Wall Street Journal reports that in certain parts of the country, job applicants with dummy profiles reflecting a particular religion were more likely to be denied interviews compared to those with profiles reflecting another religion.

The FHA’s intersection with the Internet came under judicial scrutiny in Fair Housing Council v., LLC, 521 F.3d 1157, 1166 (9th Cir. 2008). The federal appeals court in San Francisco found that the website, which connects housing providers with tenants, was “designed to force subscribers to divulge protected characteristics and discriminatory preferences, and to match those who have rooms with those who are looking for rooms based on criteria that appear to be prohibited by the FHA.” Id. at 1172. Despite’s argument that it was not responsible for the information on the profile pages, the court ultimately held the website could be responsible for information its users posted that violated the FHA.

Real estate providers that request access to a potential tenant’s social media profile may be engaging in the same type of conduct the Ninth Circuit determined was unlawful—forcing individuals to divulge protected characteristics and affiliations.

State Regulation of Social Media

Moreover, if housing providers examine tenants’ social media pages, the providers may become subject to state legislation. State laws regulating such activity already affect several other industries: Before April of this year, 12 states—California, Illinois, Michigan, and New Jersey—enacted legislation barring employers from requesting access to applicants and employees’ social media accounts. Some of these laws cover educational institutions as well as employers. For example, Michigan’s Internet Privacy Protection Act (Public Act 478) prohibits employers and educational institutions from requiring access or disclosure of information that would allow access or observation of a personal social media account. Similarly, California’s Social Media Privacy Act (comprised of AB 1844 and SB 1349) offers protections to employees and college students.

Wisconsin, in addition to being the thirteenth state to place restrictions on an employer’s access to its employees’ or job applicants’ social media profiles, is the first state to also extend such restrictions to landlords. Wisconsin Public Act 208 makes it unlawful for employers, educational institutions and landlords to request the passwords of job applicants’ and employees’ social media accounts. Specifically, under the new law’s Section 995.55(4), landlords may not require a tenant or prospective tenant to provide access to a social media account as a condition of tenancy. Moreover, landlords may not discriminate against a tenant or prospective tenant who refuses to allow access or disclose access information to a social media account. State Bar of Wisconsin, Social Media Snooping: Bill Limits Access to Personal Internet Accounts, Oct. 2, 2013.

It is important to note that none of these laws cover access to public sites, including the public contents of a potential tenant’s Facebook page. However, housing providers, like educational institutions and employers, should still be cautious when viewing social media profiles because all three entities are covered by anti-discrimination laws, such as fair housing laws. Additionally, with studies demonstrating the impact of social media on hiring decisions, those seeking to enforce fair housing laws may attempt to use online profiles to ferret out potentially unlawful conduct.

Mortgage Lending and Social Media

Considerations about the use of social media are also relevant to mortgage lending. In keeping with the trend of alerting entities to avoid social media profiles, the Federal Deposit Insurance Corporation (FDIC) has issued guidance reminding lenders of the advantages and disadvantages of relying on information from social media to make decisions. In its Financial Institution Letter, FIL-56-2013 (Dec. 11, 2013), the FDIC warns that creditors using social media should not request, collect, or use personal information, such as information disclosing an individual’s age and/or sex improperly when considering applications for mortgages. Indeed, the FDIC notes that creditors must provide a detailed adverse action notice specifying the reasons for an adverse decision, and this requirement applies even where the information used to deny credit came from social media. As it is unlawful for a mortgage lender to discriminate on the basis of race, color, national origin, religion, sex, familial status, or handicap under the Fair Housing Act, relying on social media to obtain such information could put a lender at risk of a violation.

Keywords: real estate litigation, condemnation, social media, Internet privacy, FHA, mortgage lending

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