Dive Brief:

• On Oct. 3, the Supreme Court denied a petition asking it to review a lower court’s decision in a $20 million settlement with Facebook over sponsored stories, as reported by MediaPost. 
• At issue is whether Facebook’s change to its terms of service following the settlement constitutes a blanket waiver that could still make it possible for children’s photos to appear in ads without parental consent. 
• The challenge, which was brought by The Children’s Advocacy Institute, argued that the settlement does not go far enough to protect children. The challenge was previously rejected by an appeals court.  

Dive Insight:

While Facebook discontinued its sponsored stories program several years ago, the issue of how user-generated content is leveraged by publishers and marketers remains important.

As consumer disinterest in traditional ads grows, marketers are putting greater emphasis on content marketing, in some cases pushing up against the line of what is considered editorial versus sponsored content. Part of the problem is that the market for user-generated content has grown so quickly, with many new and unique use cases, that legislators and marketers are still trying to figure out where to draw the line. This lack of clarity is why some legislators have been reluctant to move, preferring to watch how consumer use and the market evolve first.

The Facebook case is a good example of the confusion that still exists around user-generated content. The sponsored stories program put users’ photos and names in ads shown to their friends. While it was discontinued after user backlash, Facebook continues to allow users’ names and photos to be used in ads, but with new terms of service in place.

The case stems from a class action suit brought several years ago against Facebook, alleging the company violated a California law saying companies need adult permission before using a child’s name or image in an ad. Under the settlement, Facebook was required to collect adult permission to use children’s photos.

While the Supreme Court did not comment on why it denied the appeal, the earlier dismissal argued that it’s unclear if Facebook’s ad program violated California’s law and that the settlement offers more protection than was previously in place.

While the Supreme Court denial would seem to put the issue to rest for now, it is likely that the use of consumers' photos and names in ads will continue to be watched closely by advocacy groups as digital marketing expands.