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Proposed Settlement in US Action

It has been reported that Facebook has entered into a settlement with the Plaintiff in a US lawsuit with respect to Sponsored Stories. This settlement:

a) Presently extends only to the claims advanced in the US Action, and does not affect the claims of Ms. Douez or of the proposed class members in the BC proceedings; and

b) Is conditional upon approval by the US Court, and approval has not yet been granted.


Class Action Filed Against Facebook Over "Sponsored Stories"


VANCOUVER (March 29, 2012) -- Branch McMaster LLP has filed a class action in the Supreme Court British Columbia on behalf of British Columbia residents who are Members of Facebook and whose name, portrait, or both have been used by Facebook in a ‘Sponsored Story’.

The lawsuit was initiated by a Plaintiff who alleges that her name and portrait were used in connection with a “Sponsored Story” as an implied endorsement of a third party advertiser’s product or service without her consent.

The lawsuit alleges that since January 25, 2011, Facebook uses its members’ names or portraits in connection with its Sponsored Stories advertising or promotion of goods or services without the members’ consent, contrary to the provisions of the Privacy Act.

Unlike traditional advertising including that previously used by Facebook, a Sponsored Story uses a Member’s name or portrait to endorse goods or service of a third-party advertiser (a “Sponsor”) to that Member’s Friends, as follows:

  1. When a Member engages in certain activities within the Website, such as clicking the Like Button in connection with a Sponsor or its goods or services or Page, Checking In to a physical location linked to Sponsor, or using an application or App connected with a Sponsor, Facebook may generate a Sponsored Story;
  2. The resulting Sponsored Story displays the Member’s portrait or name beside and in connection with the Sponsor’s advertisement or logo, and contains a purported endorsement by the Member in relation to the Sponsor or its goods or services; and

Through Sponsored Stories, Facebook transforms the character of a Member’s actions in clicking the Like Button, Checking In to a location or using an App into an endorsement of goods or services by the Member which is then published by Facebook to the Member’s Friends. In so doing, Facebook authors and creates a unique and new advertisement through the rearrangement of text and images which then features the Member as an endorser, marketer or advertiser of a third party good or service to his or her “Friends”.

In marketing Sponsored Stories to third party advertisers, Facebook states that recommendations of friends have a powerful influence on consumer interest and purchase decisions. The lawsuit alleges that Facebook receives significant revenue from its Sponsored Stories advertising but does not compensate its members for the use of their names or portraits in Sponsored Stories advertising or promotion of goods or services.

The lawsuit also alleges that Facebook does not give notice to Members that their names or portraits are being used in connection with a Sponsored Story or that Facebook is depicting that Member as endorsing a particular good or service. In other words, other Members may view advertisements, including Sponsored Stories, purportedly endorsed by a Member who is unaware that his or her name or portrait is being used in connection with that advertisement. In addition, it is alleged that Facebook does not allow Members to either limit or altogether block the appearance of their names or portraits in connection with a Sponsored Story.

Similar claims are being filed in Saskatchewan, Manitoba, and Newfoundland.


Chelsea Hermanson
Branch MacMaster LLP

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