Fair Housing and AI in Real Estate

The Fair Housing Act of 1968 bans discrimination in the sale, rental, financing and advertising of housing. Amendments in 1988 added familial status and disability to the protected classes. Section 3604(c) bars notices, statements or ads that indicate a preference, limitation or discrimination based on a protected class, and it applies to text an AI tool writes for you. In Texas Department of Housing and Community Affairs v. Inclusive Communities Project (2015), the Supreme Court held that disparate impact claims can be brought under the Act. So a neutral-looking practice with an unjustified discriminatory effect can create liability. Facebook's ad system is the defining AI case. After lawsuits from civil rights groups, a 2019 settlement removed age, gender and ZIP code targeting for housing ads. HUD also charged Facebook that year. In 2022, the Justice Department settled a case requiring Meta to stop using its Special Ad Audience tool and build a system to reduce skew in who actually sees housing ads. The lesson is that a delivery algorithm can skew an ad's audience even when the advertiser's targeting is neutral. Chatbots add steering risk. Questions about whether an area is safe, has good schools, or suits people of a certain background invite answers that direct people toward or away from neighborhoods. A safer design points users to objective sources such as public crime maps or school district sites and does not describe neighborhoods in demographic terms. In 2024, HUD released guidance on tenant screening and on advertising through digital platforms, both addressing algorithms. Federal guidance and enforcement priorities can shift between administrations, and guidance is not law. The statute, private lawsuits and state laws, many of which protect more classes such as source of income, still apply. A common misconception is that relying on a vendor's algorithm shifts responsibility. It does not.