Facebook’s Controversial Beacon Program Remains Subject of Lawsuits
By Brian Cole
Published on October 28, 2009
Despite an agreement to settle a class action lawsuit to the tune of $9.5 million dollars, Facebook continues to find itself the subject of legal action resulting from the company's controversial Beacon advertising program. As part of the previous class action agreement, the popular social networking website shut down the program amid privacy concerns in September of 2009, slightly less than two years after its inception.
Beacon gathered user purchase histories from a variety of retailers, including Blockbuster, Zappos.com, Hotwire.com, and others, and shared these purchases with others by posting them on users' Facebook pages. According to the company, the purpose was to allow targeted advertising for partner companies and a channel through which users could share interests and activities with their online friends.
Not everyone saw it that way.
The Beacon program quickly became a public relations issue for Facebook. The month it was launched, more than 50,000 Facebook members joined an online group organized by MoveOn.org and petitioned to have the social networking site halt the program. On December 5, 2007, Facebook CEO Mark Zuckerman took responsibility for Beacon and offered an easier way to opt-out of the program. In addition to providing compensation to plaintiffs, roughly two-thirds of the $9.5 million settlement will be used to create a privacy research foundation.
Another lawsuit against Facebook was announced October 9. Three Texas residents who have a pending lawsuit filed against Blockbuster for the company's participation in Beacon have now filed suit against Facebook as well. The lawsuit alleges that, by sharing movie rental and purchase information without written consent, the Beacon program violated the 1988 Video Privacy Protection Act.
In the case, Blockbuster's attorneys claim that that the company's contract with customers waives the right of users to file class action lawsuits and stipulates that disputes be heard by an arbitrator, not the courts.
The plaintiffs' lawsuit against Blockbuster overcame a significant hurdle when U.S. District Court Judge Barbara Lynn ruled that, because Blockbuster contract terms and conditions can be changed at any time, the contract is "illusory," or deceptive to customers. Though Blockbuster is appealing this decision, it could open the door for the case to proceed as a class action. At this time it is not entirely clear whether the Texas Blockbuster Beacon lawsuit and its possibility of becoming a class action will affect the previous class action settlement agreed to by Facebook.
The law these cases hinge on, The 1988 Video Protection Act, was passed after a reporter obtained the video rental history of then U.S. Supreme Court nominee Robert Bork. Among the list of what turned out to be scandal-free cinematic fare: Alfred Hitchcock's "The Man Who Knew Too Much." Certainly few can now claim to have known too much then about the new communication styles to come and the laws that would be needed to govern them, least of all Facebook CEO Mark Zuckerman, who was only four at the time.
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