Parents Urge Court To Scrap Facebook's Sponsored Stories Settlement

Facebook's $20 million settlement of a class-action privacy lawsuit should be scrapped on the ground that the deal allows the company to continue using minors' names and images in ads, a group of parents argue in new court papers.

“A federal court may not approve a settlement that authorizes a party to violate a state law,” the parents say in papers filed on Thursday with the 9th Circuit Court of Appeals.

“This settlement does just that, permitting Facebook to flout laws designed to protect children from being co-opted into serving as unpaid endorsers in advertisements and from having a momentary online interaction as a teenager immortalized on the Internet -- potentially to the minor’s future personal embarrassment or professional detriment.”



The parents, who are represented by the watchdog group Public Citizen, are asking the 9th Circuit to vacate the agreement. The settlement resolved a class-action lawsuit alleging that Facebook's sponsored stories violates a California law about endorsements.

That law says companies need adults' permission before using their names or images in ads. When minors' names or images are used in ads, companies must obtain parental consent. While the lawsuit centered on California's law, six other states also prohibit companies from using minors' name and images in ads without obtaining permission from parents.

The settlement requires Facebook to pay $15 each to around 600,000 users who were featured in “sponsored stories” -- ads featuring users' names and images and shown to their friends. The deal also requires Facebook to pay several million dollars to various nonprofits and organizations.

As part of the settlement, Facebook agreed to revise its terms of service so that users state they give permission for their names and photos to be shown in ads. Users under 18 must represent that at least one parent agrees.

But the parents say those terms actually enable Facebook to continue using minors' names in ads without parental permission -- even though doing so potentially violates the law in seven states. (Facebook is ending its old “sponsored stories” program in April, but plans to still show users' names and photos in social ads.)

“The settlement approved by the district court perpetuates and purports to authorize ongoing violations of the laws of multiple states,” the opponents argue. “The proposed settlement therefore fails to meet a threshold requirement of a valid, court-approved class action settlement: that the terms of the settlement be lawful.”

Also on Thursday, Campaign for a Commercial Free Childhood, a designated recipient of the settlement fund, said it was rejecting the money. The organization had been slated to receive $290,000, representing 90% of its annual budget.

“Not only is the settlement bad, it is worse than no settlement at all,” the organization aid in a letter filed with the 9th Circuit Court of Appeals. “In addition to failing to provide any real benefits for teenagers, the ... settlement agreement authorizes Facebook to use the images of minors without parental consent,” the group writes. “Despite the significant financial loss that this could represent, CCFC can no longer be a part of a settlement that it now understands would directly conflict with its mission.”

Earlier this week, a separate group of settlement opponents also asked the 9th Circuit to set aside the deal.



Next story loading loading..