Facebook allows advertisers to exclude ethnic groups from seeing ads, according to a new bombshell report from non-profit news organization ProPublica.

The social media giant gives marketers many options for targeting their ads, including locations, preferences and interests. However, one of these categories is called “Ethnic Affinities” — and ads that exclude people based on race and gender violate federal housing and employment laws.

“This is horrifying. This is massively illegal,” a civil rights attorney said when ProPublica showed him the racial exclusion option. “This is about as blatant a violation of the federal Fair Housing Act as one can find.”

To test the tool, ProPublica bought a fake housing ad on Facebook and excluded anyone with an “affinity” for African-American, Asian-American or Hispanic people. Though experts say this violates the law, Facebook defended its multicultural advertising, noting that it prohibits “negative exclusion.” The site also said that this kind of targeting is common in marketing to guarantee only the intended audience sees an ad.

“All major brands have strategies to speak to different audiences with culturally relevant creative. Just for purposes of illustration, a car company will run creative for one of their vehicles, but will have one creative execution targeting the Hispanic affinity cluster in Spanish,” Facebook said in a statement. “They may create a different creative for the African American affinity cluster featuring black actors and stressing another insight that is specific to that group.”

Facebook said that it’s looking into how the ProPublica ad was approved, though it was also quick to point out that the ad was actually for a renters’ forum related to housing and not housing itself. (This distinction could shield Facebook from facing legal consequences.)

With such serious allegations leveled at Facebook (and the site’s apparent belief that it’s in the right), you can bet we haven’t heard the last of this controversy.

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