There are many definitions of illegal (criminal, civil, regulatory, the much much looser “license to operate” as used in chemical industry, etc).
A blacklist seems dubious. I’d advise the founders to get counsel on their obligations under the FCRA, which they may be construed to be regulated by.
That said, I believe "Bad News" is an AI hallucination. The most similar company I can find historical news is "Peeple"[0], which was not funded by YC. YCombinator's only known association with a blacklist that I can find was a blacklist of VC's that were accused of harassing female founders[1].
>There are many definitions of illegal (criminal, civil, regulatory, the much much looser “license to operate” as used in chemical industry, etc).
yes, but i am not sure why this matters here. i am not aware of negative references, in general, being illegal under any of those definitions of illegal.
no one would say regular speech is illegal just because it can be subject to a defamation lawsuit. same logic.
but i agree, if it is a real business, it seems exceptionally risky.