US-based Public Citizen led organisations backing a legal brief urging a federal appeals court in San Francisco to throw out the deal made last year.
The filing said the settlement fails to compel the social network to change its ways when it comes to using profile images of teenage members in ads without the consent of parents or guardians.
The practice is specifically banned by laws in California and six other US states, according to Public Citizen attorney Scott Michelman.
"The capture and republication of teen postings by Facebook is a pernicious assault on their rights to decide where their messages should go," said Robert Fellmeth, director of the Children's Advocacy Institute at the University of San Diego School of Law, which is representing another challenger to the settlement.
A US judge approved the deal in August to make Facebook pay for using members "likes" as endorsements for ads.
The pot of money is to be divvied among attorneys, Internet privacy rights groups and Facebook users who filed claims in the class-action lawsuit.
Those turning on the deal include Campaign for a Commercial-Free Childhood, which is in line to receive US$290,000 of that Facebook money if the settlement deal survives appeals lodged against it.
Under the terms of the deal, California-based Facebook would let parents control how their children's likes and posts are used, or not used.
Public Citizen has joined those calling for posts or likes by those younger than 18 years old to be automatically made off-limits for ads.
The judge who signed the settlement reasoned that the deal was fair given the challenges of proving Facebook members were financially harmed or that signaling "likes" for products didn't imply consent. Facebook plans to discontinue its Sponsored Stories advertising programme in April.
"The court-approved settlement provides substantial benefits to everyone on Facebook, including teens and their parents, and goes beyond what any other company has done to provide consumers with visibility and control over their information in advertising," Facebook spokesman Jodi Seth said.
Seth added that the argument that the settlement doesn't line up with state laws was rejected last year and that other groups still support the deal.
The company reasoned in court that the practice merely takes information users have already voluntarily disclosed to their "friends," and redisplays it to the same persons, in a column that contains traditional paid advertising.
The lawsuit was filed in early 2011 after Facebook launched its advertising programme.
Source: AFP via I-Net Bridge
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