Facebook Seeks to Clarify How It Uses Member Data for Ads

New Tools for Users to See How Their Actions Are Redeployed by Sponsors

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Facebook is proposing to clarify how it manages user data for advertisements, as part of an agreement stemming from a settlement of a class-action lawsuit.

The company, owner of the world's largest social-networking service, said today it is working to provide simpler language on how it may use a member's name, profile picture and other data for ads. Facebook also plans to add a provision that says minors will verify that a parent or guardian has consented to them being part of such ads.

"The goal here is to be very clear with people about how advertising works on Facebook," said Erin Egan, chief privacy officer for policy.

"Moving forward, under the settlement, we're working on a new tool that will let people view which of their actions on Facebook that have been redisplayed in sponsored stories," a company spokesman said after a judge approved the deal, "and to opt out of those types of additional sponsored stories, in the future, if they choose."

Facebook is seeking to reassure its 1.15 billion users about how it manages and protects member information amid efforts to retain its consumer base and sustain revenue growth. The company has faced multiple privacy flaps over the past few years, which it has taken steps to address. In late 2012, Facebook unveiled new privacy tools that provided shortcuts for managing settings, including what members can see on user accounts.

The new proposals reflect some of the agreements laid out in the lawsuit settlement for the company's "Sponsored Stories" ads, which access users' names and other data to help create ads.

Sponsored Stories
The 2011 lawsuit accused Facebook of appropriating the names, photographs and identities of users to advertise products without their consent. "Sponsored Stories" was a "misleading advertising scheme" using material posted by Facebook users on their profile pages, according to the complaint. The company said the claims were "meritless" in a court filing.

The settlement called for better explanations of the company's advertising policies and new requirements for minors' data.

Facebook is proposing changes to two legal documents, its "Data Use Policy" and the "Statement of Rights and Responsibilities." The updates include more information on how outside applications may use data; how the company gathers information on members from mobile devices; and how advertisers may be able to reach users from the details they already have on them. Facebook is seeking member comments on the proposals.

Facebook, which makes most of its revenue from ads, reported last month that second-quarter sales rose 53% to $1.81 billion, topping estimates of $1.62 billion. The company's shares recently rose above their $38 initial public offering price, amid investor optimism that Facebook is making headway in mobile advertising.

~ Bloomberg News and Ad Age staff ~

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