July 28, 2009 at 8:00 AM ET
The woman pictured in the ad was his wife.
The Lynchburg, Va., man had no doubts that his marriage was a happy one, so he figured some other kind of mischief must be at play. There was: privacy mischief.
A brief investigation uncovered this uncomfortable truth: Cheryl Smith's picture had been swooped up by a company advertising with the social media giant and used to generate an advertisement. She had no idea her image could be used that way, and until her husband spotted the ad, she was unaware that she'd become a model for an online dating company.
"Fortunately, he has a sense of humor. Otherwise it could have played out very differently," Smith, 44, said.Facebook has a long and tortured history of attempting highly targeted advertising by mining data and usage habits from users. In 2007, the site began tracking user purchases and sharing the information with other Facebook users. After a protest, the practice was quickly abandoned. More recently, a flap over changes to Facebook's terms of service led to an online eruption, and another reversal.
In this case, first spotted by Smith on July 13, Facebook blames the incident on the third-party company, which it says was violating its policies.
"The ads that spooked people were from rogue networks that have been dealt with," said spokesman Barry Schnitt. "The ads were removed, some ad networks were banned from Facebook, and developers were warned."
Schnitt wouldn't reveal what company created the Smith ad, but said it had received a warning.
Focus on privacy settings
The Smith incident, which got some traction on blogs and first attracted mass media attention last week from CNBC.com, has again focused attention on Facebook's privacy settings. A hard-to-spot toggle switch now in Facebook users' settings page grants the firm, by default, permission to use consumers' information in advertisements to their friends. Users who want out of the arrangement must manually switch the setting, called "Appearance in Facebook Ads," to "No One."
But even if her toggle were set correctly, Smith wouldn't have been able to prevent her brief stint as a dating site model, Schnitt said. The toggle only control special "social" ads that are directly under Facebook's control. These ads essentially rebroadcast items that users have already agreed to place on their public wall space. The most common social ad takes this format: "Bob has recently become a fan of msnbc.com's Elkhart Project. Do you want to become a fan?" Those ads have been on the site for about a year, according to Facebook.
But ads that appear in third-party applications, or in other places on the site, aren't governed by the toggle, Schnitt said. That means users who are concerned about the Schnitt incident shouldn't bother changing their settings.
Schnitt agreed the Smith advertisement was disturbing, and said the company took it down as quickly as possible. While another "rogue" third party could pull a similar stunt, he said the firm is "aggressively enforcing" its terms and conditions with advertisers. The site will not permit any ads that mislead consumers or misuse user data or photos.
"We're not going to let people misuse the Facebook platform," he said.
Free comes at a cost
The company is trying to walk a fine line between creating relevant ads, while avoiding ads that are spook or anger its users.
"This is absolutely new territory. There aren't long established policies and procedures for this. So we're going to have to continue to educate people about it," he said.
Ironically, Smith -- who runs CultureSmithConsulting.com, where she is blogging about the experience – gives advice on social media for a living. She thinks these kinds of incidents are simply part of life for consumers who use "free" Internet sites.
"The fact that it's free, meaning it comes at no financial cost, doesn't mean there aren't other costs associated with it," she said. "This is one of those potential costs."
That's why consumers need to focus extra attention on privacy settings for all free sites they use. It's difficult, if not impossible, to control what information a company may grant to third parties, and whether or not those third parties will follow agree-upon rules.
RED TAPE WRESTLING TIPS
If you still want to change the privacy toggle and prevent your actions on Facebook from appearing in ads to other users, follow this click trail: Settings=>Privacy=>News Feed and Wall=>Facebook Ads. Then select "No one."
Facebook says consumers who think ads are invasive ads should either click on the thumbs down arrow near the ad, or click "report this" and tap out a complaint.