Facebook may be all about shameless self-promotion, but that isn’t stopping five people from suing the social networking company for violating California privacy laws and for false advertising.

The complaint filed in California state court alleges that Facebook users assume that personal information and photos they post on the site are shared only with authorized friends. “Users may be unaware that data they submit ... may be extracted and then shared, stored, licensed or downloaded by other persons or third parties they have not expressly authorized,” the suit reads.

The complaint includes a lengthy description of an alleged massive data-mining operation at Facebook, which it claims has transformed Facebook from a social networking company to a data-mining company. It charges the company with gathering and analyzing site content without the knowledge or consent of its users.

Facebook said the lawsuit has no merit and that it intends to fight it.

This is not the first time Facebook has been criticized for its privacy policies. Earlier this year, it changed its terms of use to claim, in essence, perpetual ownership of all content loaded on the site. After users complained, it omitted that provision from its terms of use.

Why it matters: Consumer advocates and some lawmakers express concern over the privacy implications of behavioral advertising, in which ads are targeted to individual users based on data collected from them. However, social networking sites are experimenting with ways of making their businesses profitable, and an obvious choice is behavioral advertising. We expect to see more lawsuits against social networking sites in the near future as this issue evolves.