Facebook Ads May Be Illegal & Cost Billions

Facebook's idea of inserting ads into user profiles and sending it to their network of friends could be illegal in the State of New York. The program allows corporations to set up Facebook pages where visitors who take certain actions can thereby trigger the sending of a “Social Ad” to their network of friends. Here is Facebook’s own explanation:

The NY Times is reporting that, Facebook’s Social Ad platform may be illegal in New York under a 100 year old privacy law that states that “any person whose name, portrait, picture, or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained” can sue for damages, and doing so is a criminal misdemeanor.

William McGeveran, a professor at the University of Minnesota Law School said users can sue advertisers who use their names and images without permission under a common law principle. He quotes from the law:

"One who appropriates to his own use or benefit the name or likeness of another is subject to liability to the other for an invasion of his privacy."

This is similar to the international ad campaign run by Virgin Mobile where a 16-year-old girl's photo was taken from Flickr without her consent. Virgin Mobile has been hit with a law suit over the incident however the company maintains that the use of the photo is lawful and fits with Virgin’s image.

Now imagine this scenario playing out with hundreds, thousands and maybe even millions of Facebook users. Soon Facebook will be buried in so much legal trouble. Hey, maybe Facebook could turn this into a business model. Why not Viacom's has built a successful business on litigation. Wow! what will the new Facebook valuation be?