By Brendan Sasso - 06/12/12 03:10 PM EDT
According to the FTC, Spokeo was behaving as a consumer reporting agency by marketing profiles for background screenings and job recruiting. Federal investigators said Spokeo encouraged companies to use its service to "Explore Beyond the Resume" and ran online ads targeting employers.
Consumer reporting agencies have to meet a variety of requirements under the Fair Credit Reporting Act, such as ensuring that the personal information they sell is accurate and is only used for legal purposes. The law also requires agencies to notify consumers of negative information in their report.
The FTC accused Spokeo of failing to meet the requirements of the Fair Credit Reporting Act and of misrepresenting endorsements by failing to disclose they were made by Spokeo's own employees. In addition to the $800,000 fine, Spokeo agreed not to violate the Fair Credit Reporting Act in the future or misrepresent endorsements.
In a blog post, Spokeo co-founder Harrison Tang said the FTC focused on a previous version of the website and that the company has already changed many of its business practices.
He said the site never intended to act as a consumer reporting agency.
"We are a technology company organizing people-related data in innovative ways," Tang wrote. "We do not create our own content, we do not possess or have access to private financial information, and we do not offer consumer reports."
The complaint against Spokeo was first filed by the nonprofit Center for Democracy and Technology.
—Updated at 1:19 p.m.