Privacy, consumer groups ask court to reject Facebook ads settlement

A coalition of consumer and privacy groups will ask a U.S. court to reject a settlement that allows Facebook to use minors' pictures in advertisements on the site without their parents' consent.

The groups, including Public Citizen and the Center for Digital Democracy, will ask the U.S. Court of Appeals for the Ninth Circuit to reject a US$20 million settlement, approved by a judge last August. Users of Facebook filed the class-action lawsuit in 2011 after the social-media site used their images without permission in advertisements called sponsored stories.

The groups, filing their challenge to the settlement Thursday, argue that Facebook's continued use of teens' pictures without parental consent violates the law in seven states, including California, Florida and New York.

Margaret Becker, a parent from New York, is represented by Public Citizen in the challenge to the settlement. "I'm fighting this settlement because Facebook shouldn't be permitted to use my teenage daughter's image for profit without my consent," she said in a statement. "But this settlement lets Facebook make my daughter a shill and leaves me powerless to stop it."

The Campaign for a Commercial-Free Childhood (CCFC), a group slated to receive $290,000 in the settlement, announced Thursday it would reject the deal.

The group now believes the settlement is "worse than no settlement," CCFC director Susan Linn said in a statement. "Its purported protections are largely illusory, and it will undermine future efforts to protect minors on Facebook. We could do a lot of good with $290,000, but we cannot benefit from a settlement that we now realize conflicts with our mission to protect children from harmful marketing."

The settlement allowed cash payments of $15 to Facebook members who submitted valid claims. It also required Facebook to give users better information about, and control over, how their names and likenesses are used in connection with sponsored stories.

Facebook spokeswoman Jodi Seth defended the settlement, saying the company allows users to opt out of the sponsored ad program.

"The court-approved settlement provides substantial benefits to everyone on Facebook, including teens and their parents, and goes beyond what any other company has done to provide consumers visibility into and control over their information in advertising," she said by email. "The same arguments on state law were raised and rejected by the court last year, and a dozen respected groups continue to support the settlement."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.