James sez, "Everyone knows that Facebook's Beacon application was a privacy disaster. But it was also probably illegal.
I've written up an analysis of Beacon under a 1988 law that flatly prohibits video stores from telling people what their customers rented. Every time Blockbuster spammed your friends list with an announcement about your latest online video purchase, it was violating that law. At a minimum $2,500 fine per violation, this could be a pretty serious legal problem for Blockbuster and Facebook."
There are two possible sources of VPPA trouble here . First, in step (4) when Facebook found out that Ethan had purchase The Producers, that might have been a disclosure either by Ethan or by Blockbuster. Second, in step (6) when Ethan's friends found out that he'd bought it, that might have been a disclosure by Ethan or by Facebook.
Let's start with the disclosure to Facebook (step (4)). Blockbuster looks like it has a strong argument here that Ethan was the discloser, not it. After all, it was Ethan's browser that told Facebook what he'd rented, not Blockbuster's web site. Since Ethan isn't a video tape service provider, that's the end of the story.
I don't think that argument works, though, because Ethan's disclosure to Facebook is pretty much a textbook example of an involuntary act.