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On March 28, the U.S. Department of Housing and Urban Development (HUD) accused Facebook of violating the Fair Housing Act by encouraging discrimination based on race, religion, sex, familial status, national origin and disability through housing service-related ads.

The allegation came roughly a week after Facebook settled with multiple civil rights and labor organizations over a similar accusation of facilitating discriminatory advertisements. The company said it would stop allowing housing, employment or credit ads to target an audience based on their ZIP code, age or gender, according to a statement from Facebook's chief operating officer, Sheryl Sandberg. 

However, while Facebook has publicly agreed to adjust its advertising practices, lawyers said the company may be able to rely on Section 230 of the Communications Decency Act as a defense against HUD's current charge.

Under Section 230 of the CDA, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Such a provision may be enough to defend against HUD's allegation.

“Typically in civil cases brought by a private party against a Facebook, the Communications Decency Act would act as an absolute defense against this type of suit,” said Dan Powell, an attorney who litigates internet defamation at Ohio-based law firm Minc.

“The reason is what HUD is charging Facebook for and I realize they are being creative in how they frame the charge, but at the same time, the nuts and bolts is HUD is charging Facebook for the behavior of users on its platform,” he added. 

Still, Eric Goldman, a Santa Clara University School of Law professor and director of the university's High Tech Law Institute, noted that Facebook may face questions over if it directed third parties to specify what ZIP code and other information is used to target an ad. “The question is whether Facebook would be liable in the way in which it gave the advertisers to show the ad.”

Goldman cited the 2008 U.S. Court of Appeals for the Ninth Circuit decision in Fair Housing Council of San Fernando Valley v. Roommates.com that held Roommates.com didn't have immunity under Section 230 because its requirement for subscribers to disclose their sex, family status and sexual orientation indicated an intent to discriminate. 

“In that case the court said the defendant didn't qualify for Section 230 when the defendant asked illegal actions that exposed discriminatory intent,” Goldman said. “What we don't know is if Facebook's self-service configuration options constituted illegal questions under the Roomates.com case.”

To be sure, many internet-based businesses have asserted Section 230 immunity in the past. Notably, Congress amended Section 230 last year to allow civil and criminal sex trafficking-related claims against internet companies, which Powell said proved Section 230 was a defense to thwart liability.

While Facebook may have a defense under Section 230, some observers could view HUD's discrimination charge as a knock to the freedom advertisers have on Facebook. 

“The way I read the charge, obviously HUD isn't saying Facebook is discriminating but what they are saying is the options Facebook gives to its users, advertisers and limiting the target of its ads results in discrimination,” Powell said.