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October 2009

SPECIAL ALERT

Facebook Settles Privacy Lawsuit for $9.5 Million

Facebook recently settled a class action lawsuit filed in California against its Beacon program.  Under the Beacon program, users who visited one or more of the Facebook Beacon-affiliated websites and engaged in a triggering activity would have their information shared with Facebook regarding their activities on the affiliated websites.  The plaintiffs alleged that, inter alia, the Beacon program violated the Electronic Communications Privacy Act, the Video Privacy Protection Act, and the Computer Fraud and Abuse Act.  Specifically, the plaintiffs claimed that Facebook violated consumers’ privacy rights by failing to properly provide notice of the Beacon marketing and data sharing activity, and failing to obtain informed consent before acquiring and transmitting personal information from Beacon-affiliated websites to Facebook.  As part of the settlement, Facebook will establish and administer a cash settlement fund of $9.5 million.  The money will be used to establish and operate a privacy foundation devoted to education programs for users, regulators, and enterprises.  The programs will center on critical issues for protecting identity and personal information online.  Additionally, Facebook has agreed to terminate the Beacon program.

TIP: In the wake of this settlement, as well as the developments we reported on regarding the FTC's online behavioral advertising guides and its recent settlement with a major retailer regarding the same, companies that engage in online data sharing for marketing purposes should have plans in place to give notice about their activities, and to obtain permission from consumers.