Saw this posted by a friend on fb:

FACEBOOK has agreed to let a third party advertisers use your posted pictures WITHOUT your permission. (also known as “opt-out”) Click on SETTINGS up at the top where you see the Log out link. Select Privacy. Then select NEWSFEEDS and WALL. Next select the tab that reads FACEBOOK ADS. There is a drop down box, select NO ONE. Then SAVE your changes. (REPOST to let your friends know!)

When I asked him for a source, he responded with:

Just saw a friend’s face in an ad on facebook for “singles in your area”….she is most definitely married.

Fun stuff.

Update! 2009-08-05

According to http://blog.facebook.com/blog.php?post=110636457130 this was all a non-issue.

But apparently the only thing keeping third party applications from doing this is the AUP. Just another reason I don’t like most of the 3rd party apps on fb.