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Running Head: Facebook Lawsuits: Privacy Issues




                            Facebook Lawsuits: Privacy Issues

                                      Elissa Peterson

                                 Oral Roberts University
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Running Head: Facebook Lawsuits: Privacy Issues
Introduction

       It is no surprise that because Facebook is such a profitable phenomenon, they are now

being bombarded with lawsuits. If there is cash flowing in a business, it will get sued. This is no

exception with Facebook, where they have rapidly been adding users at a rate of over 150,000

people per week (O’Neill, 2009). One huge area that Facebook is dealing with is privacy issues.

This seems like the easiest target for lawsuits because personal information, names and photos

are posted on the web for whomever to see. The main use of Facebook is for people to join

networks and connect and interact with other people. Users can also send people messages, add

friends, and update their personal profiles to notify friends about themselves. The website

currently has more than 150 million active users worldwide (O’Neill, 2009). It is open to anyone

over the age of 13.


Facebook Beacon Lawsuit


       Beacon service made available since November 2007, is highly controversial. Among

many other lawsuits Facebook has been slapped with, this is one of the many privacy issue

lawsuits Facebook can add to their collection. The problem with the Beacon service is that it

never sought user approval before collecting personal information, and was keeping track of

other people’s purchasing habits that were not signed up for Facebook (Kinkaid, 2008). The suit

was filed on August 12, 2009 in the California Northern District Court. The following is direct

quotes from the court room:


        “The Beacon program sent information regarding specific user transactions on Facebook

Beacon Activated Affiliates’ websites to Facebook regardless of whether the user was a

Facebook member or not. Thus, no consent was sought, nor was any consent obtained from
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Running Head: Facebook Lawsuits: Privacy Issues
persons who utilize the Facebook Beacon Activated Affiliates’ website who were not Facebook

members…”


         “It was deceptive because, in almost every instance, the information sharing was contrary

to the stated privacy policies of the Facebook website and every other Facebook Beacon

Activated Affiliate that had signed up for the program (Kincaid, 2008).”


         Facebook is not the only online source that has used this program, Beacon. Many others

include: Hotwire, Travel Inc, Overstock, Blockbuster, Fandango, Gamefly and Zappos (Kincaid,

2008).


         Uproar of angry Facebook users was not happy with Facebook because it signed them up

for the Beacon program automatically. The problem with the program was that it was an opt-out

instead of opt-in. What this meant, is that thousands of users had no idea that their tracking

purchases would be posted on their Facebook profiles. Damage had already been done after

Facebook changed its policies and made the ad system opt-in.


         Mid October 2009, a federal judge in California gave approval to a settlement of the

lawsuit in regards to Facebook’s Beacon program (Perez, 2009). The lead plaintiff in the case

was Sean Lane. He became very angry when his purchase at Overstock.com became public on

his Facebook profile. He had bought a diamond ring for his wife, which was originally supposed

to be a surprise. Lane, along with eight other plaintiffs who had similar situations are the ones

who filed the class action lawsuit against Facebook.


         The case is drawing to a close, and has been in litigation since last year. Richard Seeborg,

U.S. District Court judge, has approved the proposed Facebook settlement that means the
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Running Head: Facebook Lawsuits: Privacy Issues
company will be paying out $9.5 million, two-thirds goes to setting up a non-profit foundation.

The foundation would raise money to fund projects and initiatives that promote the cause of

online privacy, safety and security (Perez, 2009). The last 1/3 of the money would be split

among the plaintiffs and the lawyers. According to MediaPost, each individual would receive

somewhere in between $1,000 to 15,000 for damages.


         There is also another part of the settlement that Facebook’s Beacon program must cease

permanently. If the proposed settlement does go through, Facebook would be relieved from

liability from any future lawsuits of the same complaint. Even lawsuits that are still pending such

as the Facebook/Blockbuster class action suit that was filed in April 2008, cannot be used in

court.


         The proposed settlement sounds like it would be a win-win situation for all those

involved. Damages would be paid and Facebook would promote online privacy (Perez, 2009).

David Johnson, a Digital Media Lawyer, says that Facebook is already required by law to

promote online privacy. Johnson also stated that the FTC mandates that users’ safety and

security of their information must be kept private unless the company has permission. Facebook

would also have say over the board members on the proposed Privacy Foundation’s board of

directors. This leaves room for whatever Facebook thinks is permissible. It looks most favorable

to Facebook in this situation. Johnson also says, “Facebook effectively gets most of its money

back to fund projects that it is already has an obligation to perform.”


         This settlement was proposed last month and received preliminary approval on Friday,

October 23rd 2009. The plaintiffs have until February 1st to object to the proposed settlement.
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Running Head: Facebook Lawsuits: Privacy Issues
Related Cases


       Facebook is not a stranger to privacy issue infringements. One example comes from an

employee at TechCrunch.com, his name is Michael Arrington. He started three years ago on

TechCrunch as a hobby. Arrington is very well known on the web and highly influential.

Business week named him one of the 25 most influential people on the web (Arrington, 2008).

Forbes also named him number two on their list of web celebrities. His agent is always warning

him about how companies on the web can easily use/abuse his personal brand for commercial

reasons. He did not see the Facebook problem coming at all.


       Facebook had been allowing advertisers to post ads using his picture and name to endorse

their products without Arrington’s permission. He has received countless emails asking if he was

associated with Blockbuster’s Movie Clique application, or the new Jackass movie. Which

Arrington is not associated with either one.


       Arrington’s attorneys believe that the use of his name and image in third party advertising

is a violation of statutory and common law publicity rights. When people see these types of ads

on the web, it leads to confusion, because people don’t know whether or not Arrington is

endorsing the ads that his picture is associated with the product. Arrington resides in California,

in which they are one of the most aggressive states in protecting people’s privacy because of the

large mass of entertainment business. This law in California is called the Civil Code Section

3344, which allows for recovery of damages, relief, attorney’s fees, as well as damages of

$750/incident in the event a person’s “name, voice, signature, likeness or photograph is used

(Arrington, 2008).” The law also covers “in any manner on or in products, merchandise, or
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Running Head: Facebook Lawsuits: Privacy Issues
goods, or for purposes of advertising or selling, or soliciting purchases of products, merchandise,

goods or services without such person’s prior consent (Arrington, 2008).”


        Facebook will most likely appeal this case saying that user’s giver permission in the

terms and conditions that they must accept in order to create a profile. They also allow users to

opt out of having their images placed in ads. Lawyers agree that it is a pretty good defense, but

believe with emotional appeal and the consequences it has in people’s lives, they can still win the

case.


        Every incident where Arrington’s name or likeness that was used in ads against his will

totals hundreds of thousands. Multiplying that number by $750 would, at the very least, be $150

million.


        Arrington and his lawyers are willing to settle with Facebook stock. Negotiations became

very sketchy when this hit court. Chris Kelly, Chief Privacy Officer led the discussion. The team

of lawyers on Arrington’s side offered to settle for $50 million. Kelly told Arrington that

Facebook would “bury you and bury your crappy blog” if the suit was filed.


        Another case also occurred in California. A group of Facebook users filed a civil lawsuit

the beginning of August 2009 (Musil, 2009). Five plaintiffs are in the case are seeking for a jury

trial, as well as attorneys’ fees and damages. These individuals include: a professional

photographer, a model, and actress and two children younger than 13 (even though in

Facebook’s terms and conditions, all users must be over 13). The suit is a 40-page complaint

accusing Facebook of using private information to third parties for commercial purposes.
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Running Head: Facebook Lawsuits: Privacy Issues
       "Plaintiffs and the general public desire and expect a level of privacy, which Facebook

has failed to satisfy under its current policies, procedures, practices, and technology," the

complaint states.


       A Facebook spokesman said, "We see no merit to this suit and we plan to fight it."

It seems as though Facebook is not concerned to keeping their members’ privacy and even

exploits their information with no permission. It is easy for users to deactivate their Facebook

accounts but it is unclear and difficult to totally delete them. This causes for possible bad

situations to occur because Facebook can keep data from deactivated accounts for as long as they

want and will most likely try to use that information for their benefit.


       Another case against Facebook with the issue of privacy seemed a little far-fetched.

Plaintiffs in this case were starting up a company and decided to make a Facebook page to

promote their business. Just like other Facebook users, they uploaded photos, writing status

updates and filled in the personal sections of the company’s profile. They are now complaining

that privacy, and copyrights are violated as people look at the photos and read the updates

(Kincaid, 2009). It’s not like anyone made them create the profile in the first place. The suit

alleges that Facebook is a “data mining company, which seeks to open or disseminate private

information to third parties for commercial purposes and economic benefit (Kincaid, 2009).”

They also accuse Facebook of only wanting personal and private information but doing this in a

non-obvious way.


       Another Plaintiff is also objecting to the fact that Facebook has changed from college-

only networks to a much broader one. The plaintiff is also complaining about how the Terms of
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Running Head: Facebook Lawsuits: Privacy Issues
Service are constantly modified over the years, so no one really knows what the actual conditions

are because it does not give notice to its users.

        Even though these are all valid complaints to some degree Facebook’s terms and

conditions are pretty cut and dry on the site. It states as follows, “You own all of the content

information you post of Facebook, and you can control how we share your content through your

privacy and application settings.” The problem is, most people do not read fully their terms and

conditions and are unaware that they actually have to go into their settings in order for Facebook

to not use their personal information or pictures. Like all other suits, Facebook sees no merit in

this lawsuit either, and plans to fight it (Kincaid, 2009).

        Another lawsuit was just recently filed in early November 2009. This one was filed by a

woman in Texas who says Facebook violated the Video Privacy Protection Act. She alleges that

Facebook conspired with Blockbuster to violate a federal law protecting sale records and

consumer video rental (Zetter, 2009). The plaintiff is Cathryn Harris and took her complain the

the U.S. District Court in Dallas, TX. Blockbuster made an agreement with Facebook to feed

them information about movies users rented or either purchased from Blockbuster.com.

        “This suit is without merit, and we will fight it vigorously,” Facebook spokesman Barry

Schnitt wrote in an email statement (Zetter, 2009).

        That response from the Facebook spokesperson is almost verbatim in every situation. It

seems like a ridiculous PR move because businesses needs to admit their fault and do everything

in their power to fix it.

Under the Beacon program, 44 companies agreed to give Facebook information about the online

transactions of Facebook users so the information found could be seen by all of the “friends” on

their profile page. Not only was it an opt-out program but individuals used to have to visit each
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Running Head: Facebook Lawsuits: Privacy Issues
of the individual partner sites to prevent their data from showing up for everyone to see on

Facebook (Zetter, 2009). \ Harris said the proposed settlement of 9.5 million is not good enough.

She feels this way because it does not really have any real consequences for Blockbuster or any

of the other 43 other businesses.

Ruling

         In the case of Facebook’s Beacon program vs. many plaintiff’s who have fallen victim to

the situation, I would find Facebook guilty. It is a sly way to get people’s information without

their consent. In the case of Lane vs. Facebook, the ruling that is would be most effective is to

rule in the favor of Lane. It is a deceitful way to take advantage of users for any type of business

out there. Users should have been notified of the changes in the policies and since they were not

Lane and other plaintiffs that were victims in the situation that need to be paid for their troubles.

The fact that Lane’s purchase was supposed to be a surprise for his wife and Facebook ruined it,

is really frustrating and if I were in that situation I would have been very upset. It just seems like

Facebook is taking advantage of the people who are signed up on their site and overusing their

territory and crossing way too many boundaries. The proposed settlement of 9.5 million is

reasonable but I feel like it is still not enough of a consequence for Facebook. They have to

promote online privacy, but their guidelines already said that they must do that, but it was

violated anyways. While they promote online privacy, they also get to promote their business in

a non obvious way. I feel like Facebook should have a more serious consequence like not using

the Beacon program at all. The option is still on Facebook under settings and privacy.

Assumptions must be made that not too many people know about this program because I didn’t

know about it until I started the research, but you still have to check the box that says Facebook
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Running Head: Facebook Lawsuits: Privacy Issues
cannot track any of your purchases. It is a huge marketing gimmick which is deceitful and must

be abolished.
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Running Head: Facebook Lawsuits: Privacy Issues
                                          References


Arrington, Michael. (2008). Why We’re Suing Facebook for $25 Million in Statutory Damages.

Retrieved, (27 October 2009) from www.techcrunch.com/2008/03/31/why-were-suing-facebook-

for-25-million-in-statutory-damages/.


Kincaid, Jason. (2008). Facebook Gets Slapped with Another Lawsuit after Beacon, Wishes it

Could Opt-out. Retrieved, (3 November 2009) from www.techcrunch.com/2008/08/14/facebook-

gets-slapped-with-another-lawsuit-over-beacon-wishes-it-could-opt-out/.


Musil, Steven. (2009). Users file privacy lawsuit against Facebook. Retrieved, (30 October 2009)

from www.news.cnet.com/8301-1023_3-10311625-93.html.


O’Neill, Nick. (2009). Facebook Hit With 3 Lawsuits in One Week. Retrieved, (13 October

2009) from www.allfacebook.com/2009/10/facebook-hit-with-3-lawsuits-in-one-week/.


Perez, Sarah. (2009). Facebook Settlement Gets Judge’s OK. Retrieved, (27 October 2009) from

www.readwriteweb.com/archives/facebook_settlement_gets_judges_ok.php


Zetter, Kim. (2009). Lawsuit Accuses Facebook of Conspiring to Break Video-Privacy Act.

Retrieved, (6 November 2009) from www.wired.com/threatlevel/2009/11/beacon

				
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