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Facebook settlement rejected over concerns about the privacy of children used in advertisementsReuters

A children's charity has turned down $290,000 (£170,000) in compensation from Facebook, as it believes the social network has not adequately adjusted its policy on using young users in 'Sponsored Story' advertisements.

Based in Boston, Massachusetts, the Campaign for a Commercial-Free Childhood (CCFC) charity rejected Facebook's offer - equating to 90% of the nonprofit's annual budget - because it believes the settlement offered is worse than no settlement at all.

"It harms vulnerable teenagers and their families under the guise of helping them," Susan Linn and Josh Golin of the charity said. "Its purported protections are largely illusionary and will actually undermine future efforts to protect minors on Facebook."

The charity goes on to claim Facebook's offer "is in direct violation of our mission to help parents raise healthy families by limiting commercial access to children."

Opting out

Last August, Facebook offered to pay out $15 to each of around 614,000 users who had filed a class-action lawsuit against the company for using the names and profile pictures of teenage users in adverts - known as Sponsored Stories - without payment, or offering a way of opting out.

Facebook used the names and pictures of an estimated 150 million users who had 'Liked' a product, company or service on the social network. Liked products would then appear on the pages of the users' friends with their profile picture and the message "[Name] likes [product/service]."

CCFC's concerns are shared by advocacy group Public Citizen, which has filed an appeal asking for the settlement to be revoked, because it continues to allow Facebook to use the profile pictures of users under 18 in advertisements without their parents' consent, violating privacy laws in several states.

'Putting burden on parents to opt the child out is backward'

Under the disputed settlement, Facebook agreed to create a system whereby users aged 13 to 18 would indicate whether their parents were on Facebook. If they are, the parents would take control of whether or not the children's image is used on advertisements for products and companies they 'Like'.

If their parents are not on Facebook, the social network pledged to automatically opt children out of being used in advertising under they reach 18.

Lawyers believe such a set-up would remain illegal in some states because a teenage user could click through the agreements without gaining explicit parental consent. States which require explicit consent include California, Florida, New York, Oklahoma, Tennessee, Virginia and Wisconsin.

"The default should be that a minor's image should not be used for advertising unless the parent opts in," said Public Citizen lawyer Scott Michelman. "Putting the burden on the parent to opt the child out gets it exactly backward."

In a statement sent to the New York Times, Facebook spokeswoman Jodi Seth said: "The court-approved settlement provides substantial benefits to everyone on Facebook, including teens and their parents, and goes beyond what any other company has done to provide consumers visibility into and control over their information in advertising.

"The same arguments on state law were raised and rejected by the court last year, and a dozen respected groups continue to support the settlement."