NEW YORK (Reuters) -The United States and Facebook (NASDAQ:META) owner Meta Platforms Inc have settled a lawsuit over a housing advertising system that illegally discriminated against users based on race and other characteristics, the Department of Justice said on Tuesday.
In a lawsuit filed in federal court in Manhattan, the Department of Justice (DOJ) said Meta encouraged advertisers to target users based on features like race, religion, and sex, in violation of the Federal Housing Act. That law prohibits discrimination in housing based on such characteristics.
Meta denied wrongdoing, but agreed to pay a $115,054 civil penalty, the highest allowed under the law. Complaints over ads-based discrimination have dogged the company since 2016, and the company has reached settlements with Washington state and rights groups over similar allegations.
As part of the deal, the company agreed to stop using an algorithmic tool known as "Special Ad Audience" and design a new housing advertising tool by the end of the year.
"Because of this ground-breaking lawsuit, Meta will — for the first time — change its ad delivery system to address algorithmic discrimination," Damian Williams, the U.S. Attorney for Manhattan, said in a statement.
Meta said it would also use the new system for advertisements related to jobs and credit.
"Discrimination in housing, employment and credit is a deep-rooted problem with a long history in the U.S., and we are committed to broadening opportunities for marginalized communities in these spaces and others," the company said in a statement.
The case stems from a 2019 civil charge filed by the U.S. Department of Housing and Urban Development.
The DOJ said Facebook made some changes as part of its 2019 settlement with rights groups, but said that deal did not address the delivery of ads through machine-learning algorithms.
The settlement reached on Tuesday is subject to review by a judge.