• by Wendy Davis , Staff Writer @wendyndavis, January 15, 2013

Instagram riled users last month when it issued startling new terms of service. Among the most surprising changes, the service said it reserved the right to license users' photos to advertisers.

Many users responded by saying they planned to defect from the service, which was recently purchased by Facebook. Faced with the uproar, Instagram quickly withdrew the new terms and sent its lawyers back to the drawing board. The company indicated that it never intended to start licensing people's photos, but that doesn't excuse it for issuing terms with such expansive language.

Instagram then came out with another round of revisions that no longer contained the controversial language about licensing people's photos to advertisers. But those terms still aren't as user-friendly as the original ones. For instance, the new terms state that most types of disputes will be resolved in arbitration and that users can't bring class-actions.

The whole fiasco may or may not have cost Instagram users, but it certainly didn't help the company's reputation. It also could result in some new legal battles. Already, two potential class-action lawsuits have been filed since the new terms were issued.

One lawsuit, by Lucy Funes, alleges that the new terms amount to a breach of contract with users. The gist of her grievance seems to be that Instagram might at some point in the future roll out a sponsored-stories program; if and when that day comes, she will no longer be able to sue in court under the new terms.

Legal experts are mocking the lawsuit, pointing out that not only is it premature, but that users like Funes can always leave the service before the new terms go into effect.

The other case, by Instagram user Steven Gutierrez, is based on allegations that the service uploaded users' information -- including their address books -- without their consent. Instagram had already been named in a separate lawsuit about address-book uploads, so those allegations in themselves weren't particularly new. That complaint, filed by attorney Joseph Malley (who has also brought privacy lawsuits against NebuAd, Facebook and other Web companies), doesn't appear to be subject to the new ban on class-actions because it was brought before the new terms took effect.

This week, Instagram sent emails to users reminding them that the new terms are effective as of Jan. 19. "As we announced in December, we have updated our terms of service and privacy policy. These policies also now take into account the feedback we received from the Instagram community," the email says, according to AllFacebook.com. "And remember," the company adds, "these updates don’t change the fact that you own your photos that you post on Instagram, and our privacy controls work just as they did before."