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The Perils of Social Media . . . for Social Media Providers

If you subscribe to our newsletter, you know that recent issues have addressed the uses of social media in litigation, often to the detriment of social media posters. But it appears that litigation can also be perilous for social media providers.

This fall, Facebook agreed to pay $20 million dollars to settle a class action lawsuit that alleged the company used members’ likenesses to sell/advertise “liked” products without their consent.  We all know that companies advertise on Facebook. Users have the capability to “like” products and services that companies promote on the site. Facebook did not, however, allow users to control or limit the use or publication of such “likes.” In fact, Facebook gave no hint whatsoever as to how the information might or could be used. In some cases, Facebook sold user “likes” to companies advertising on the site. The companies then used those “likes” in product advertisements and endorsements. For example, one unwitting user who “liked” a 55 gallon drum of personal lubricant discovered that “like” show up as an unauthorized product endorsement.

The $20 million dollar settlement will be used to compensate victims of these unauthorized ads and endorsements. As a result, each of the 614,000 users who responded to the class notice will get paid for the unauthorized use of their name and likeness. That payment, however, only amounts to about $15.00 per class member. There is another upside for users though. This lawsuit represents the latest step in creating more controls, privacy protections, and transparency around users’ interactions with social media providers.

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