Appeals court upholds deal allowing kids’ images in Facebook ads

On Wednesday, a federal appeals court in San Francisco upheld a 2013 settlement between Facebook and a number of advocacy groups representing minors whose images were used in "Sponsored Stories." That agreement resulted in Facebook paying each member of the class $15 and imposed some changes to the social media giant's disclosure policies.

"It is not clear whether Facebook’s use of minors’ names and likenesses in Sponsored Stories violated California law," the court wrote. "It is also not clear whether the settlement at issue—which provides more protection for minors from Facebook’s advertising practices than existed before—violates state law. The district court did not abuse its discretion in approving the settlement in the face of this uncertainty."

The original case, known as Fraley v. Facebook, was brought against Facebook in 2011, citing violations of both federal and California state law. The case alleged that when Facebook took a "like" of a user under the age of 18 and then used that data, name, and image in a Sponsored Story without the parents’ permission, the company was doing so illegally.

By 2013, the parties came to an agreement that was approved by United States District Judge Richard Seeborg. While Sponsored Stories specifically were eventually eliminated from the social network in April 2014, Facebook continues to use such user data, even from minors, as a way to sell other forms of targeted advertising. In short, Sponsored Stories' features were incorporated into other ads.

After the deal was approved, one of the organizations was slated to receive $290,000, and another new outside group argued last year before the court that the settlement was illegal.

However, Public Citizen and other groups, including one that received $290,000 from the settlement, appealed to the 9th Circuit Court of Appeals. They argued that the 2013 settlement made things worse than before, as it enabled Facebook to simply add language to its terms and conditions that adults and minors both agree to when they sign up for the site. Public Citizen and others say that this setup is direct violation of explicit parental consent laws in California, Florida, New York, Oklahoma, Tennessee, Virginia, and Wisconsin. For its part, Facebook essentially maintains that this is the deal that users make when they sign up for the site, even if they are minors.

Public Citizen and the other appellants could request an en banc hearing at before all of the judges of the 9th Circuit or appeal to the Supreme Court. Such further appeals are rarely granted, however.