Consumers, Shareholders Waste No Time Filing Class Action Lawsuits Against Facebook, Cambridge Analytica Over Data Mining [UPDATE]

Consumers and shareholders Tuesday fired the opening salvos in what is sure to be a complex, prolonged legal battle over Facebook’s true intentions when it comes to safeguarding its users’ privacy, and what role the beleaguered social media staple and Cambridge Analytica, a co-defendant in a consumer-filed complaint, may have played in swaying the 2016 presidential election.

Two proposed class action lawsuits filed in California federal court seek answers from Facebook, two of its top officials, and Cambridge Analytica, a company that “combines data mining and data analysis with strategic communication for use in the electoral process,” one case explains. The plaintiffs in each complaint, however, represent entirely different groups of people who are believed to have been harmed due to the defendants’ alleged conduct.

Cambridge Analytica’s Alleged “Campaign of Psychological Warfare” on Facebook Users

A Maryland woman’s 15-page complaint against Facebook and Cambridge Analytica challenges the companies’ “absolute disregard” for proposed class members’ personal information. The plaintiff claims that though Facebook purports to protect its users’ information, Cambridge Analytica, a third-party actor, “improperly collected the personal information of nearly 50 million Facebook users,” with—supposedly—little to no authorization to do so.

“Facebook, for its part,” the lawsuit reads, “knew this improper data aggregation was occurring and failed to stop it, or actively avoided discovering such knowledge in order to profess supposed ignorance.”

The plaintiff adds that she was “frequently targeted” with political ads while using Facebook throughout the 2016 presidential election. This is notable in that the lawsuit describes Cambridge Analytica as an outfit run by a “secretive hedge fund billionaire” whose family is “known for its far-right conservative positions.” In short, Cambridge Analytica is reported to be a major, albeit quasi-clandestine, player across the American political landscape. From the complaint:

The [Cambridge Analytica] website discloses that it has offices in Washington, DC and in New York, but upon information and belief, it is neither registered to do business nor is licensed to conduct business in either jurisdiction. In 2015, [Cambridge Analytica] became known as the data analysis company retained by the Ted Cruz presidential primary campaign, but after that campaign faltered in 2016, [Cambridge Analytica] worked for the Donald Trump presidential campaign. An interview with [Cambridge Analytica’s] CEO (Alexander Nix) confirms that the Trump campaign paid for [Cambridge Analytica’s] services and that then-candidate Trump was ‘a good businessman.’”

The lawsuit cites March 17^th reports from the New York Times and The Guardian that blew the whistle on Cambridge Analytica’s alleged use of Facebook users’ information without permission. Among the disclosures in the reports, the case reads, it was revealed that Cambridge Analytica, working with President Donald Trump’s election campaign to target voters online, obtained the data of 50 million individuals without permission by way of posting a survey app on Facebook in 2014 called “MyDigitalLife.” The app, the suit continues, was supposedly “a research app used by psychologists” to help users better understand their personalities. According to the complaint, the app was downloaded by roughly 270,000 people, which provided Cambridge Analytica with “a backdoor” to the data of every user and their friends—more than 50 million people—who the suit claims failed to adjust their Facebook privacy settings to block the improper access.

All of this was realized through a whistleblower, the complaint says, who, with “receipts, invoices, emails, legal letters” and other records in hand, explained Cambridge Analytica’s data mining operation to The Guardian:

With their profiles, likes, even private messages, [Cambridge Analytica] could build a personality profile on each person and know how best to target them with messages.”

This operation amounted to a psychological warfare campaign on “millions of hapless victims,” the lawsuit alleges, noting that of the reported 50 million users affected, only the 270,000 who participated in the MyDigitalLife survey ever consented to exposing their data, and even with consent, only for ostensible research purposes.

Citing a March 19^th Bloomberg piece, the complaint mentions Facebook’s handling of its users’ data may already be in the crosshairs of the Federal Trade Commission (FTC). The agency will reportedly very closely examine the transferring of user data to Cambridge Analytica and whether Facebook violated a 2011 consent decree governing user consent with regard to changes in user privacy settings.

“The incident has violated the privacy of millions of people in every state,” the lawsuit alleges. “The privacy and personal, sensitive information of 50 million people is now at high risk for identity theft and compromise, and will continue to be at risk as a direct result of the acts of [the defendants].”

The class the lawsuit seeks to cover includes anyone in the United States with a Facebook account whose information was obtained through Facebook by Cambridge Analytica “without authorization or in excess of authorization.”

Waiting for the Other Shoe Stock to Drop

Perhaps even more worrying for Facebook, at least when it comes to the almighty bottom line, is the second proposed class action case filed Tuesday. The 26-page complaint—which, in addition to Facebook, Inc., names founder Mark Zuckerberg and CFO David M. Wehner as defendants—seeks to cover a proposed class of shareholders who bought or otherwise acquired common shares of the company between February 3, 2017 and March 19, 2018 – known as the “class period.” The lawsuit’s primary charge, predictably, concerns what the ongoing fallout from the data mining scandal has done to Facebook’s stock prices.

Citing alleged violations of federal securities law, the lawsuit claims that Facebook, throughout the class period, issued “materially false and misleading statements” regarding its business, operational and compliance policies.

Specifically, [the defendants] made false and/or misleading statements and/or failed to disclose that: (i) Facebook violated its own purported data privacy policies by allowing third parties to access the personal data of millions of Facebook users without the users’ consent; (ii) discovery of the foregoing conduct would foreseeably subject the Company to heightened regulatory scrutiny; and (iii) as a result, Facebook’s public statements were materially false and misleading at all relevant times.”

Like that in the previous complaint, the timeline in this lawsuit kicks up with the March 17^th bombshell report revealing Cambridge Analytica hijacked the personal information of 50 million Facebook users. Upon disclosure of this news, the lawsuit claims, Facebook’s share price sank 6.67 percent on March 19.

Again echoing the first complaint, the securities action notes the March 19^th Bloomberg report on the potential FTC probe into Facebook’s use of user data, this time coupling its detailing of the piece with a summons issued by the U.K. Parliament a day later requesting Zuckerberg “give evidence over the scandal.” With this news, the lawsuit says, Facebook’s share prices sank further, by 4.48 percent.

At the heart of the case are statements presented by Facebook during the class period that the plaintiff alleges amounted to the concealment of the extent to which users’ data was available to unauthorized third parties. While quarterly reports issued during the class period more or less came up roses for the social media company—with the individual defendants attesting that Facebook’s public disclosures “fairly present, in all material respects” the reality of the company’s operating and monetary results—the defendants’ statements altogether failed to disclose Facebook’s continual violation of its own supposed privacy policies, the suit claims.

How do I join a class action lawsuit against Facebook and/or Cambridge Analytica?

Though the scandalous components of the lawsuits detailed on this page have garnered national attention—and attention from already alarmed lawmakers calling for Zuckerberg to answer a litany of questions in person—you generally don’t have to do anything to join either of these class action lawsuits.

Class actions can take a notoriously long time to wind their way through the court system. If you believe you’re covered by one or both of the lawsuits on this page, your best course of action is to sit tight and stay tuned. This scandal is far from over.

The complaints for both lawsuits can be read below.