Facebook to pay out $10 million to settle 'Sponsored story' lawsuit

Filed Under: Facebook, Law & order, Privacy, Social networks

Sponsored storyFacebook has agreed to pay out $10 million to settle a class action lawsuit brought by users unhappy over the use of their details in "Sponsored story" ads.

The suit in question was based on California’s Right of Publicity Statute, which prohibits the non-consensual use of another person’s name, voice, signature, photograph, or likeness for advertising purposes.

U.S. District Judge Lucy Koh wrote in her decision:

California has long recognized a right to protect one's name and likeness against appropriation by others for their advantage.

The payout will go to charity rather than to the individuals, according to The Telegraph.

The case, filed in December and settled last month, boils down to just exactly what it means when we click on that big old thumbs-up "Like" button.

Facebook users and Facebook itself have radically different interpretations.

Facebook has contended that when a user 'Likes' a page or product, s/he is effectively endorsing the brand and giving consent to use his/her name and photo to promote it.

The company's interpretation of 'Like' was brought to light in an interview with Facebook's Vice President of Public Policy Elliot Schrage that the BBC aired in early December in the UK.

Elliot SchrageBrought to light painfully, that is, given Schrage's obvious discomfort with the notion that there could be anything possibly wrong with appropriating a user's image without notification, compensation or consent, to serve as a spokesperson for whatever that given Facebook user gave a thumbs-up to.

Schrage developed a near-disabling case of the "Well, um, errs" when BBC reporter Emily Maitlis quizzed him about the ethics of "Sponsored Stories" (that's what Facebook calls these things, although founder Mark Zuckerberg has said they're ads) on Facebook.

(To view the squirm, check out Graham's Cluley's post, which includes video.)

Here's the relevant script bite (sound effects courtesy of Graham):

Emily Maitlis, BBC: If I press a 'Like' button on a brand that could pop up as a Sponsored Story. I might not know about it, I certainly wouldn't necessarily agree to it ...

Elliot Schrage, Facebook: But when you press a 'Like' button on a brand, or an ad or on a page, you're saying "I like this."

Maitlis: But I'm not saying "I advertise this!"

Schrage: Well, it ... I suppose when you ... so let's pause.

[awkward pause]

It's an interesting..

[fx: tumbleweed]

Schrage: You're asking a profound question. What's advertising? When I press a 'Like' button on an ad, I'm trying on the Facebook system, I am affirmatively communicating that I am associating myself with whatever I'm liking. And what that does is, it creates a story.

Emily Maitlis interviews Facebook's Elliot SchrageMaitlis: Well you can call it a story, many people would call it an advertisement, and Facebook is getting paid for those by the companies.

Schrage: Isn't it a ... I, I think it's a ... it's a ranking mechanism. I don't know if I would call it an advertisement.

Unfortunately, Facebook provides no way to opt out of appearing in these ads/Sponsored Stories.

That's not changing because of this $10 million payout, either.

Thumbs up, courtesy of ShutterstockAs The Telegraph's Emma Barnett points out, if the case had been tried in court, consumer rights groups might have had a chance to change how Facebook exploits its users by associating them with brands for profit.

The fact that Facebook settled means we'll have to wait for another possible lawsuit to determine if users or the company would win out in court.

California's Right of Publicity Law mandates payments of $750 or an amount equal to actual financial damage suffered for wrongful endorsements.

Don't get your hopes up about Facebook coughing up that money to all users, though. As some commenters have pointed out, only California Facebook users can benefit, thanks in large part to laws that stem from celebrities being one of the state's protected natural resources.

If you're on Facebook, you should consider joining Sophos's Facebook page, where over 180,000 people regularly share information on threats and discuss the latest security news. It will help you keep up-to-date on the latest privacy issues, scams and malware attacks. And yes, we get the irony..

Thumbs up image, courtesy of Shutterstock

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9 Responses to Facebook to pay out $10 million to settle 'Sponsored story' lawsuit

  1. There is more going on here than meets the eye. Facebook does indeed give you the right to opt out of these ads but the wording of the opt out is confusing and, probably, misleading. Maybe you can't opt out in the States but you can in Canada. Additionally, websites are using the Facebook social plugin in different ways. If you check out the facepiles on a few sites, you'll see that some show only your friends, some show no one and some show complete strangers. When you see a facepile of complete strangers, say on a teen site, you can quite easily click any face that seems interesting and get taken directly to that person's Facebook profile. To me, that's the real danger with Facebook's cavalier attitude towards its user's privacy. I've written extensively about all of this on my website.
    Good story. I'm glad someone else is noticing the dangers that Facebook's ad strategy carries with it.

    • Coghill · 793 days ago

      That is true and in the USA as well, but I think the issue is that not many people know how to and it usually requires viewing your own profile page and finding where it says that you liked the product and then looking for the options to hide, remove, unlike, etc...

  2. Lisa Vaas · 793 days ago

    Thank you for the input, Brian. Glad you liked the story. What's the site where you write about these issues?

  3. Fubar · 793 days ago

    google results for "Brian Mahoney facebook ad"
    http://brianmahoney.ca/2012/05/facebook-ad-settin...

  4. Gary · 793 days ago

    What about if you dislike an ad/Sponsored story? Does it still use your Facebook information to hawk their wares? If not, perhaps the other option to force Facebook into changing how they handle 'likes' is to start a grass-roots social engineering action whereby if you like something you give it a thumbs down instead. Then the companies that are paying Facebook to put these ads/Sponsored stories out there will force the change, instead of having to force the issue through the court system. Big companies like Facebook respond and take action when advertising revenue is at stake. I'm sure that the automated systems behind the scenes that tally up the 'likes' and 'dislikes' will show that something is wrong if everybody is disliking every one of your ads and products, and advertising at those companies will start to look at this and say 'Why?'. Companies spend money on advertising and don't like when that advertising fizzles and sputters, and are quick to change tactics when they see something isn't working.

    • Sirius · 792 days ago

      There is no such thing as "dislike" on Facebook, so how is this going to work?

      As a regular reader of Sophos I know that there are plenty of scams trying to convince people that there is a way to enable a "dislike" feature, which makes me very wary of the reason for this post, to be perfectly honest.

  5. marcinski · 793 days ago

    There really is no reason not to use FBblock or similar plugins in Chrome. I haven't seen one of these FB spams in a long time and don't think I'm missing much.

  6. Friendlypest · 793 days ago

    I have friends that have told me that they have seen things that said I liked them. I do not click on the ads on facebook. So I do not understand how that can happen. I have also seen it happen with my friends supposedly liking something they never liked. How can facebook say someone liked something and get away with it?

    That is very disturbing if you want my opinion. I see it all the time on target, walmart and many other ads on the site. If a person does not click like on an ad, facebook should not be allowed to say they did. I am thinking about deleting my profile as facebook is getting bad. Have a great day, God bless

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About the author

I've been writing about technology, careers, science and health since 1995. I rose to the lofty heights of Executive Editor for eWEEK, popped out with the 2008 crash, joined the freelancer economy, and am still writing for my beloved peeps at places like Sophos's Naked Security, CIO Mag, ComputerWorld, PC Mag, IT Expert Voice, Software Quality Connection, Time, and the US and British editions of HP's Input/Output. I respond to cash and spicy sites, so don't be shy.