$10 Million Settles Facebook's Sponsored Stories Suit

The social network, Facebook pays heavily for utilizing people in their advertisement without seeking permission.

California (I-Newswire) July 4, 2012 - It was reported last month that Facebook has been utilizing its users to feature in their sponsored advertisement without their knowledge. Hence five of the U.S. based users who have been featured in such "sponsored stories" about the products they have liked have filed a lawsuit against the social network for utilizing them without their consent. Now Facebook has been charged with a penalty of 10 million dollars to settle the suit by the California Federal Court, said a report. Although the case was reported in the previous month, its detail came to the limelight just a few days ago.

Agreeing to pay the said amount to a charitable fund, the CEO of the social network, Mark Zuckerberg stated that, when a user likes a products sponsored on the Facebook ad page, then their name along with their profile picture is displayed on the friend’s page along with a caption, which makes an ad more worthwhile, as referrals from trusted sources are considered as the most sanctified means of advertising, much effective than regular techniques of advertising.

The case's key issue was that Facebook had infringed upon the law of California by using the petitioners' names and profile pictures without their consents. In addition the petitioners' were neither paid for it nor given any options to accept or reject it, by the social network.

According to US District Judge Lucy Koh, it is illegal in California to manipulate someone's name, signature, voice, image or other such thing for the purpose of advertising without his/ her permission. And as Facebook has done so, it has to incur economic loss to put the things in place. However, defending itself, the network said that by agreeing to 'Facebook's Terms of Use', the user agrees to allow the company to share his/her profile and pictures for commercial or sponsored advertisements. 'Sponsored Stories', which was launched in the beginning of the year 2011 makes money by selling the users' likes, posts, etc as advertisements on the users' friends' timeline.