Do you have a Facebook Account? Do you realize that every time you click the “Like” button for a product, service or website, Facebook may distribute a paid advertisement (“a sponsored story”) using your name to all of your “Friends” suggesting that you are recommending the product or service? While Facebook is described in the popular media as a social networking site, it is, in reality, an advertising business generating its revenue through the sale of advertising. Zuckerberg (CEO of Facebook) has said: “…nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcaster message. A trusted referral is the Holy Grail of advertising.” Facebook’s COO has said: “…making your customers your marketers”…”is the illusive goal we’ve been searching for.” Consequently, Facebook is able to charge a higher rate for the “sponsored stories.”
Now Facebook has been sued in Federal Court in California over its “sponsored story” advertising practice under statutory provisions governing the right of publicity, unfair competition and fraudulent and deceptive practices. California has a law on the books that says everyone has the right to control how their name, photo, likeness, and identity is used for commercial purposes, and such use may not be done without their consent and a minimum ($750) payment. The complaint makes several interesting points, not the least of which is that Facebook employs a unique lexicon of doublespeak by intentionally distorting the everyday meaning of words and misleading members. Terms such as “friends,” “like,” “stories,” and “sponsor” may not mean the same to us as they do to Facebook. On Facebook, “friends” are not really limited to close or intimate associates; “like” does not necessarily imply an affinity for the site/item; “sponsors” are really advertisers paying for the ads; and “stories” are not written tales but are either items of friends doings, or in the case of “sponsored stories” the advertisements generated from members clicking the “Like” button. In addition, plaintiffs allege that Facebook provides no avenue for opting out of the sponsored stories.
An interesting side light to the case is that minors are allowed to become members and have their names and images used in the advertisements without requiring the consent of their parents or guardians. Needless to say, Facebook has mounted a vigorous legal challenge on both procedural and legal grounds to the accusations, asserting a laundry list of defenses including: consent upon registering under Facebook’s terms; protection under the Federal Communications Decency Act; First Amendment legitimate interest protection under the Constitution; and protection under the “newsworthy exception” for reporting on the activities of famous people. (Would you believe that Facebook asserts that that members are famous to their friends?)
On December 16, 2011, ruling on Facebook’s motion to dismiss the lawsuit, the Court refused to accept most of Facebook’s arguments, finding that plaintiffs had asserted valid causes of action under the law. The Court reserved the question of whether members consented to Facebook’s practices The case is now in its discovery phase.
In an interesting twist, just last week, two of the plaintiffs asked to drop out of the case after Facebook’s lawyers demanded discovery depositions that threatened the plaintiffs with even more loss of privacy. As of this writing, the Court has not ruled on their request.
— Laurence Weinberger, Esq.