A privacy controversy is brewing after recent news reports revealed that digital marketing firms are mining photo-sharing sites for data.

According to a story published in The Wall Street Journal, marketing companies scan images posted to social networking sites such as Instagram, Flickr and Pinterest to collect information for large advertisers. The companies use software that scans the images in bulk to reveal labels, logos, facial expressions and scenery and then passes along the information to advertisers who can then send targeted ads, conduct market research, or gauge the popularity of trends.

Can the photos really provide such rich data? According to the marketing companies, yes. A brand may search for a competitor’s logo to try to steal a customer. Alternatively, when companies find their own logos in photos, they can learn how and where their products are used (e.g., on the beach or out to dinner), they can gauge the interests a customer might have, and they can decide whether there are any relevant correlations. By categorizing findings, companies can more narrowly tailor their marketing to consumers who exhibit certain interests and product choices. And storing the images over an extended period of time can allow companies to learn whether their products are increasing or decreasing in favor with consumers.

Privacy watchdogs warned that the gray areas of privacy laws may make the collection and use of such data “ripe for commercial exploitation and predatory marketing. Users should assume that their publicly available photographs are being reviewed by marketing companies,” said Jules Polonetsky, director of the Future of Privacy Forum.

The groups argue that social media sites do not adequately communicate to users that the images they post can be scanned or downloaded for such purposes. In addition, consumers do not realize that taking a selfie with a Starbucks cup could yield an online profile or targeted marketing. “Just because you happen to be in a certain place or captured an image, you might not understand that could be used to build a profile of you online,” Joni Lupovitz, vice president at Common Sense Media, told The Wall Street Journal.

Why it matters: While marketers have already been mining tweets and social posts for keywords and trends, images create an even greater opportunity for marketers to obtain consumer information. Although no statute expressly prohibits companies from analyzing publicly available photos in bulk, the Federal Trade Commission (FTC) could possibly argue that sharing sites engage in deceptive and unfair trade practices when they fail to disclose how their information is shared with third parties. Perhaps the greater risk is the public relations fallout that can ensue if consumers find this sort of behavior “creepy.” Not too long ago Instagram suffered a public relations nightmare when it released new terms of service that would have permitted it to license photos posted on its site to third parties, including advertisers, without obtaining permission from users or paying any fees. After negative feedback and the threat that users would leave the site, it deleted the provision from its terms, proving that consumers do have some input into how their photos are used.