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Sponsored Stories: Facebook Settles Class-Action Lawsuit


Countless Facebook users in California and throughout the United States found themselves serving as unwitting spokespeople for companies in Facebook advertisements. Facebook has now agreed to pay $10 million in response to a lawsuit from disgruntled users, explains a California personal injury lawyer.

Social media giant Facebook has a unique model for advertising that has proven very lucrative for the company. Facebook users who “Like” products by clicking the “Like” button on their Facebook pages became de facto spokespeople for the products they liked, appearing in Sponsored Stories advertising the products.

According to statements made by Facebook founder Mark Zuckerberg as well as other statements by Facebook executives, sponsored stories may be between two and three times more profitable when sold to advertisers than other types of Facebook advertisements.

According to a recent article in Forbes, the profitability of these Sponsored Stories is one reason why Facebook fought back hard when they were subject to a lawsuit by some disgruntled users based on the use of their name and image in the advertisements.

The Sponsored Stories Lawsuit

The lawsuit related to Sponsored Stories was brought by a group of Facebook users claiming that Facebook did not have a right to use people’s images since the Facebook users had not given explicit permission to be used in any type of advertising. Although Facebook changed their terms and conditions on January 25, 2011 to obtain consent to use people’s names and Facebook profile picture in conjunction with sponsored or commercial content, there was no such clause in the terms and conditions prior to this date.

Although Facebook sought to have the case dismissed, arguing that any damages or economic loss to the plaintiff was speculative, a federal court ruled that there was actual economic injury and that the class action against the company could proceed. The court’s decision was, in part, based on the increased profitability associated with sponsored stories.

The Laws and the Settlement

When Facebook used people’s images and likenesses without permission, it seems clear that the company was in violation of the law. Private citizens own their own images and likenesses and their names and images cannot simply be used for commercial or advertising purposes without their permission.

California Civil Code Section 3344 addresses state law concerning the matter:

“Any person who knowingly uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent…shall be liable for any damages sustained by the person or persons injured as a result thereof. In addition, in any action brought under this section, the person who violated the section shall be liable to the injured party or parties in an amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of the unauthorized use.”

Based on this provision of the Civil Code, Facebook should not only have been responsible for paying for actual damages but should also have been responsible for paying $750 to each victim who had his or her image and name used without permission.

However, the former judge who is mediating the case, Edward Infante, indicates that it would be overly burdensome if Facebook were to pay each user who had experienced the unauthorized use of his or her likeness. Because the case is novel and in order to avoid the overly burdensome penalty, instead a settlement has been reached wherein Facebook will pay out $10 million to charities. Facebook will also be required to change their terms of service and provide more notice about Sponsored Stories, although they will continue to operate the ad program.

How to Avoid Becoming a Sponsored Story

Following the class action, Facebook has agreed to provide users with additional controls to avoid having certain actions appear in Sponsored Stories. Further, Facebook users are warned in their Statement of Rights and Responsibilities that their image and “Likes” can be used for commercial purposes.

As such, in order to avoid having your name or image featured in a Sponsored Story, you may wish to use a profile picture that is not of your actual likeness, or you may wish to use a pseudonym. Refraining from “Liking” anything on your Facebook page will also allow you to avoid appearing in a Sponsored Story.

Finally, as changes occur and Facebook gives users more rights to control their own image and its use in Sponsored Stories, you may be given the opportunity to opt out or at least to limit the use of your likeness. This remains to be seen as the approval for the class action settlement is finalized and Facebook begins to implement the new required user protections.

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