Facebook and Google both hit hard by legal action

It is not a good day for either Facebook or Google as both online giants get dragged over legal coals.

Firstly, Facebook has been forced to shut its controversial advertising service, Beacon, following a class-action lawsuit and has seen the social networking company donate US$9.5 million to a foundation dedicated to exploring the issues around online privacy and security.

The Beacon system had been implemented in 2007 in order to exploit the power of "word of mouth" marketing. It did this by inserting details of purchases made at participating websites in to the news feed of Facebook users, making it visible to all their friends.

Facebook users felt differently however and complained in vast numbers, claiming the system invaded their privacy. Facebook founder, Mark Zuckerberg, was forced to make the service voluntary and issued an apology, but a group of around 20 Facebook users started legal action against the social-networking site in August 2008.

"We learned a great deal from the Beacon experience," said Barry Schnitt, a spokesman for Facebook. "For one, it underscored how critical it is to provide extensive user control over how information is shared. We also learned how to effectively communicate changes that we make to the user experience.

"We look forward to the creation of the foundation and its work to educate internet users on how best to control their privacy; engage in safe social networking practices; and, generally, enjoy themselves more online by having knowledge that gives them a greater sense of control."

Meanwhile, Google is also being hit by legal action after a US bank discovered the search company had handed over information relating to a Gmail account that the financial institution wrongly sent sensitive customer data to.

According to a story from Wired magazine, a Wyoming-based Rocky Mountain Bank received a request from a customer in August asking for loan documents to be sent to a third party.

A bank employee then sent the documents, but to the wrong Gmail address. Attached was a file containing confidential information for 1,325 individual and business accounts that were not relevant to the customer. The file includes names, addresses, tax identification numbers and loan information.

The bank unsuccessfully tried to recall the email and when they failed, contacted Google for assistance who stated they would not help unless forced to by a court order.

The bank has since taken legal action, filing a motion asking for complaint and motion papers to be sealed to ensure customers do not find out about the error, arguing disclosure would cause unnecessary panic and a surge of inquiries.

No matter, the outcome it is a reminder that even firms with billions of revenue behind them, can't escape legal action following errors on their part or from consumer complaints.

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