Facebook users file class action lawsuit over online tracking
Facebook’s first day of trading following its $100bn flotation has been gate-crashed by a $15bn class action against the social network.
Users of the service have filed an “amended consolidated class action complaint” in federal court in San Jose, California, relating to allegations that Facebook has been “improperly tracking the internet use of its members even after they logged out of their accounts”.
The class action is being brought by law firms Stewarts Law US and Bartimus, Frickleton, Robertson & Gorny.
David Straite, a partner at Stewarts Law, said: “This is not just a damages action, but a ground-breaking digital privacy rights case that could have wide and significant legal and business implications.”
The plaintiffs are citing the federal Wiretap Act, which provides statutory damages of up to $10,000 per user and they say potentially implies damages of more than $15bn if compensation is rolled out across Facebook’s user base.
The action consolidates 21 related cases filed in more than a dozen states in 2011 and early 2012.
If successful, the claimants could stifle Facebook’s ability to collect data about its users and hinder its ability to grow advertising revenues.
The social network generated 85% of its $3.7bn revenues last year from advertising, according to its regulatory filings with the Securities and Exchange Commission.
A German data protection official also warned Facebook investors on Friday that the social network’s $38 starting share price is based on practices that breach European privacy rules.
Thilo Weichert, the data protection commissioner for the northern German state of Schleswig-Holstein, was quoted in the German daily newspaper Frankfurter Allgemeine Zeitung warning shareholders to be aware that if European privacy authorities have their way, “Facebook’s business model will implode.”
Facebook declined to comment as the company prepared to go public on the Nasdaq stock exchange on Friday.
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