The Wall Street Journal discusses how privacy groups that file class-action lawsuits against companies such as Facebook are the real benificiaries, while users may recieve nothing in return. Center for Class Action Fairness' Ted Frank explains why this is a problem.
Privacy lobbying groups such as the Electronic Frontier Foundation and the Center for Democracy and Technology get significant funding from class-action settlements. No wonder they advocate for more lawsuits. In 2011, the Electronic Privacy Information Center even went to court complaining when it wasn't among the advocacy groups sharing in a $10 million settlement from Google.
"Under the current model, the legal process serves to stoke privacy panic while also failing to explain to consumers the basic nature of the contract they undertake when they sign on with Facebook or Google," reported GigaOM. "Consumers receive an incredibly useful product for no money, but pay instead with personal information which the companies collect for advertising."
The law is a clumsy tool to regulate fast-changing technology. Indeed, under the Beacon settlement, Facebook could relaunch the program under another name even though, as Chief Justice Roberts noted, the settlement by Facebook "insulated itself from all class claims." Ted Frank, a critic of the class-action system, has written that "a lawsuit where the cost of litigation is greater than the benefit to the class suggests the social costs are greater than the social benefits."
Read the full article at the Wall Street Journal.