Facebook and its co-founder Mark Zuckerberg face risk of being sued over the site's "Like" button feature.
The site currently reveals any products or interests that users "like" to their friends. This could be illegal under Californian law which forbids unauthorised use of
people's likenesses for commercial purposes.
The company has been warned it could be sued by anyone from celebrities to ordinary citizens, Daily Mail reported on Monday.
A judge in San Jose has thrown out the company's bid to dismiss the first case against Facebook - where users allege they have been "economically injured" by the site's use of the "Like" button for advertising.
Facebook first introduced "promotions" in January this year - where users opt to "Like" products, often in conjunction with prizes or even bonuses in online games - with Zuckerberg insisting that "a trusted referral is the Holy Grail of advertising."
However, US district judge Lucy Koh has insisted that users should be entitled to some gain from commercial endorsements that stem if someone chooses to "like" a certain product or interest on the site, according to the Mail.
Whilst the case against the popular site has yet to be heard, Koh added that such a claim "present novel issues of state law for which there is no binding authority."
The company have only just settled a previous complaint by the US Federal Trade Commission over privacy issues, after it was alleged that they made promises to keep consumers information on Facebook private, only to later allowing the data to be shared and made public.
Facebook had so far refused to make a comment with the investigation to continue, the newspaper added.