Facebook Inc. is in talks with the U.S. Federal Trade Commission to settle claims that it violated users’ privacy when it changed default privacy settings to disclose more information than was previously made public, according to multiple sources familiar with the negotiations.

The proposed 20-year settlement would require Facebook to get express consent from users before sharing material posted under earlier, more restrictive terms, said the person, who declined to be identified because the settlement isn’t final. It would also compel an annual, independent review of Facebook’s privacy practices.

Citing people familiar with the situation that it did not name, The Wall Street Journal said Facebook has agreed to make the changes to resolve a nearly 2-year-old investigation by the Federal Trade Commission.

Both Facebook and the FTC declined to comment to The Associated Press.

If the settlement is approved by FTC’s commissioners, it would require Facebook to get explicit consent from its 800 million users before changing its privacy settings, according to the Journal.

Bloomberg news also reported a similar story.

Seeking a user’s prior consent is known as an “opt in.” Facebook sometimes makes changes that it believes will improve its social network and then leaves it to users to reset the things that they don’t like – a process known as “opting out.” Companies introducing a feature or service generally prefer an “opt out” system because fewer people take the steps required to get out of the changes.

The FTC opened its probe into Facebook after the website made changes that automatically showed users’ names, pictures, hometowns and other personal information available for anyone on the Web to see. That upset people who had deliberately programmed their privacy settings to confine that information to a specific group of friends or family.

The FTC is stepping up its enforcement of privacy requirements at Internet companies and already has settled complaints with Google Inc. (Nasdaa: GOOG) and Twitter Inc. this year.

Cecilia Prewett, a spokeswoman for the FTC, and Andrew Noyes, a Facebook spokesman based in Washington, declined to comment on the talks to Bloomberg.

Facebook is under pressure to protect individuals’ information as it seeks revenue from  users who play games, post photos and communicate using the site. The Palo Alto, California-based company is also among the Internet companies under scrutiny in the European Union for possible privacy-rule breaches over use of personal data.

‘Meaningful Control’

The potential settlement stems from a Dec. 17, 2009, complaint filed by the Electronic Privacy Information Center, a Washington-based advocacy group.

The center asked the FTC to investigate whether consumers were harmed when Facebook changed its default privacy settings and called on the agency to require Facebook to give users “meaningful control over personal information.” Nine consumer advocacy groups, including the American Library Association, Consumer Federation of America and The Privacy Rights Clearinghouse, signed on to the complaint.

“The FTC’s action is long overdue,” Marc Rotenberg, the executive director of the center, said in a phone interview. “It’s becoming increasingly obvious that the commission has to announce its final decision in this matter. The changes in Facebook privacy settings have continued to be the most frustrating online experience for Internet users.”

Breaches alleged in the group’s complaint include changes in Facebook settings in November and December of 2009 that induced users, in response to recommendations from the company, to reveal their names, profile photos, lists of friends, pages they are fans of, gender, geographic regions and networks to which they belong.

Personal Information

The complaint called on the FTC to compel Facebook to allow users to choose whether to disclose personal information and to choose whether to fully opt-out of revealing information to third-party developers.

In April, Facebook announced additional safety tools, including a redesigned “Family Safety Center” that has videos and articles for teenagers, parents and teachers.

“This announcement will be a test of whether the FTC is capable of protecting privacy in the digital era,” said Jeff Chester, executive director of the Center for Digital Democracy, a group that has urged the FTC to address privacy issues at Facebook and other online marketers.

“It’s unlikely that anything coming out of this decree will derail Facebook from increasing its data collection practices,” he said.

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