Watchdogs Say Sponsored Stories' Settlement Won't Protect Teens

Facebook's $20 million sponsored stories settlement is drawing opposition from a coalition of advocacy groups, pediatricians and other watchdogs, who say the settlement won't adequately protect the privacy of Facebook's teen users.

“The settlement, and the accompanying changed Facebook terms of service, treats teenagers as adults and allows every interaction with Facebook to be used by Facebook for third-party marketers in commercial messages,” 15 organizations say in a proposed friend-of-the-court brief filed on Thursday with the 9th Circuit Court of Appeals.

“This is a problematic outcome for teens and goes against state laws designed to protect this vulnerable group,” the organizations argue. Groups signing on to the brief include the Center for Digital Democracy, American Academy of Pediatrics, Center for Science in the Public Interest, Consumer Watchdog and the Public Health Advocacy Institute.

The deal calls for 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 social-networking service also agreed to pay several million dollars to various nonprofits and organizations.

The settlement, which was approved last year by U.S. District Court Judge Richard Seeborg, 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.

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.

Last week, a group of parents asked the appellate court to vacate the settlement on the ground that those terms will allow Facebook continue to use 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 organizations that filed a friend-of-the-court brief on Thursday make a similar argument. “Settlement of a case brought for violations of teens’ privacy should not remove states’ privacy protections of minors,” the organizations argue. “In order to give teens the agency they expect from the Internet, social networks must allow them to express themselves without using this expression unexpectedly in marketers’ materials."

They are asking the appellate court to scrap the deal. A group of users have filed a separate appeal of the settlement, arguing that the payout to individuals is too small. “In the context of a class action that demanded payment of $750 to each class member, a $20 million settlement that provides payments of $15 to each claimant must be judged a failure,” they argued in papers filed earlier this month.

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