'Sponsored Stories' Lawsuit: Facebook May Owe You $10 After Using Your Mug In Online Ads : All Tech Considered Facebook is expected to pay out $20 million in a settlement over its "Sponsored Stories" advertising service, after placing user images in personalized ads. But the settlement doesn't stop the service, and a legal expert says Facebook's option to let users opt out creates more problems.
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Facebook Users Question $20 Million Settlement Over Ads

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Facebook Users Question $20 Million Settlement Over Ads

Facebook Users Question $20 Million Settlement Over Ads

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Next month, a federal judge will decide whether to approve a settlement in a class action lawsuit against Facebook that could affect more than 70 million Americans. The suit began when Facebook started using the likes and pictures of its users as endorsements, in ads the company calls "sponsored stories." As NPR's Steve Henn reports, a number of groups are calling the proposed settlement unfair.

STEVE HENN, BYLINE: Facebook started this ad program, sponsored stories, back in 2011. And it works like this: If I click on a "like" button next to a product - say, Coke - Facebook can then use my picture to send an add to my friends saying, Steve Henn likes Coke. The more you click on like buttons, the more ads you can appear in.

Facebook also started doing this with clicks and likes it collected from kids.

KIM NATALIE PARSONS: I have three children, and two are on Facebook.

HENN: Kim Natalie Parsons says she was furious when she realized her daughter's photos were being used in ads on Facebook without her knowledge or permission.

PARSONS: It was brought to our attention by another friend of ours, who is linked to my daughter on Facebook.

HENN: Parsons say her community in Hermitage, Tenn., is tight-knit.

PARSONS: We do a lot of watching each other's children, making sure that nothing is getting missed by the parent. And her picture was posted with an ad.

HENN: For a local ice cream store. At first, Parsons thought her 13-year-old had managed to sneak away and visit the ice cream shop without her knowledge. Then, she realized she hadn't. Her kid had just clicked a like button online. And it turned out, her daughter had clicked like buttons more than 230 times.

PARSONS: I should not have to come in as the parent, on the back end, trying to protect my child. That should be an understood.

HENN: Actually, it turns out a lot of states, including California, have laws on the books that ban companies from using people's images in advertising without explicit permission.

HEIDI LI FELDMAN: There is a very strong legal case here.

HENN: Heidi Li Feldman is a law professor at Georgetown, who specializes in class action torts and ethics.

FELDMAN: This is bad behavior. They intentionally and knowingly appropriated people's images without getting their permission, for commercial use.

HENN: Quickly, the company was hit with a class action lawsuit. By the summer of 2012, Facebook caved and tried to settle, offering $20 million. Scott Michelman is an attorney at Public Citizen.

SCOTT MICHELMAN: Well, the settlement agreement had a number of problems, the major one being that no money was ever to go to class members - under any circumstances.

HENN: Instead, $10 million was supposed to go to the plaintiffs' attorneys who brought the case, and $10 million was supposed to go to charity. A federal judge rejected that deal, ruling it was unfair to Facebook users like Kim Parsons. Now, Facebook is trying to settle the case again.

MICHELMAN: The second deal looks, in many respects, like the first. Neither prevents Facebook from violating state laws by using the images of minors without parental consent.

HENN: Facebook declined our offer for a recorded interview. But the company denies any wrongdoing, and calls the latest offer fair and adequate. If this deal goes through, adults will get the chance to opt out of these sponsored stories, but just for two years; and parents will be able prevent their kids' images from showing up in these ads as well. But for that to happen, the parent has to be on Facebook. Both the child and the parent have to tell Facebook they're related to each other; and then the parent has to dig through Facebook's settings and find the right button to click, to turn sponsored stories off.

[POST-BROADCAST CLARIFICATION: After this story aired, Facebook contacted NPR to say that it will provide a way for parents who are not on Facebook to prevent their children's pictures from being used in ads. If the settlement is approved, parents who want to disable the feature will be able to submit a form online, and attach a notarized statement declaring their "rights as a parent or guardian."]

Georgetown law professor Heidi Li Feldman says that's laughable.

FELDMAN: Do you know what is hilarious about that? That is just - becomes another data-collection mechanism for Facebook. I mean, just think about how valuable it would be to find out who's related to whom on Facebook. For marketing purposes? My God.

HENN: And many parents like Kim Natalie Parsons, the mom from Tennessee, are proposing a simpler idea. They've asked the court to require Facebook to stop using images of their children in advertising - period. And Parsons says if the company wants to use her picture in an ad, it should have to ask her first - each and every time.

Steve Henn, NPR News, Silicon Valley.

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