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August 9, 2019
Just as the Cambridge Analytica scandal re-emerged to heighten Facebook frustrations, the social media giant is contemplating a class-action lawsuit regarding facial-recognition.
It has been a tough couple of weeks for Facebook. With the ink still wet on a $5 billion FTC fine, the UK Government questioning discrepancies in evidence presented to Parliamentary Committees and a Netflix documentary reopening the wounds of the Cambridge Analytica scandal, the last thing needed was another headache. This is exactly what has been handed across to Mountain View from Illinois.
In a 3-0 ruling, the Court of Appeals for the Ninth District has ruled against Facebook, allowing for a class-action lawsuit following the implementation of facial-recognition technologies without consultation or the creation of public policy.
“Plaintiffs’ complaint alleges that Facebook subjected them to facial-recognition technology without complying with an Illinois statute intended to safeguard their privacy,” the court opinion states.
“Because a violation of the Illinois statute injures an individual’s concrete right to privacy, we reject Facebook’s claim that the plaintiffs have failed to allege a concrete injury-in-fact for purposes of Article III standing. Additionally, we conclude that the district court did not abuse its discretion in certifying the class.”
After introducing facial recognition technologies to the platform to offer tag suggestions on uploaded photos and video content in 2010, Facebook was the subject to a lawsuit under the Illinois Biometric Information Privacy Act. This law compels companies to create public policy before implementing facial-recognition technologies and analysing biometric data, a means to protect the privacy rights of consumers.
Facebook appealed against the lawsuit, suggesting the plaintiffs had not demonstrated material damage, therefore the lower courts in California were exceeding granted responsibilities. However, the appeals court has dismissed this opinion. The lawsuit will proceed as planned.
The law in question was enacted in 2008, with the intention of protecting consumer privacy. As biometric data can be seen as unique as a social security number, legislators feared the risk of identity theft, as well as the numerous unknowns as to how this technology could be implemented in the future. This was a protectionary piece of legislation and does look years ahead of its time when you consider the inability of legislators to create relevant rules today.
As part of this legislation, private companies are compelled to establish a “retention
schedule and guidelines for permanently destroying biometric identifiers and biometric information”. The statute also forces companies to obtain permission before applying biometric technologies used to identify individuals or analyse and retain data.
Facebook is not arguing it was compliant with the requirements but suggested as there have been no material damages to individuals or their right to privacy, the lawsuit should have been dismissed by the lower courts in California. The senior judges clearly disagree.
But what could this lawsuit actually mean?
Firstly, you have the reputational damage. Facebook’s credibility is dented at best and shattered at worst, depending on who you talk to of course. The emergence of the Netflix documentary ‘The Great Hack’, detailing the Cambridge Analytica scandal, is dragging the brand through the mud once again, while questions are also being asked whether the management team directly misread the UK Government.
Secondly, you have to look at the financial impact. Facebook is a profit-machine, but few will be happy with another fine. It was only three weeks ago the FTC issued a $5 billion fine for various privacy inadequacies over the last decade, while this is a lawsuit which could become very expensive, very quickly.
Not only will Facebook have to hire another battalion of lawyers to combat the threat posed by the likes of the American Civil Liberties Union, the Electronic Frontier Foundation, the Center for Democracy &Technology and the Illinois PIRG Education Fund, the pay-out could be significant.
Depending on the severity of the violation, users could be entitled to a single sum between $1000-$5000. Should Facebook lose this legal foray, the financial damage could be in the 100s of millions or even billions.
From a reputational and financial perspective, this lawsuit could be very damaging to Facebook.
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