Essentially, Facebook fails to comply with regulations regarding to profiling for third party advertising firms, as its privacy terms do not meet the "requirements for legally valid consent" of its users. In addition, it also fails to offer its users "adequate control mechanisms", regarding how their content could then be sold to and used by third party advertising corporations. This means that under the current terms, your images, videos, text and other content could be acquired by third parties, and then used to sell their products to consumers unless you opt out of these terms, a process which the report claims Facebook makes too difficult for its users. They said that it is "problematic" that default privacy settings automatically opt users in to these profiling schemes, and that this breach laws regarding consumer consent and protection. Additionally, the report also took aim at Facebook's collecting of location information. In the current Facebook mobile application there is no way to turn off the process by which it collects and uses your location data, and other information stored on your phone or tablet. The only way to get around this feature is by turning off location services on the mobile device directly, something which the authors of the report deemed unacceptable. They said that under the current privacy terms users are not offered a choice with regard to "their appearance in “sponsored stories” or the sharing of location data" with third parties, and that this must be changed to bring the policy into compliance with European law. Specifically, these issues violate the European "e-Privacy Directive" (http://en.wikipedia.org/wiki/Directive_on_Privacy_and_Electronic_Communications). Under Article 5 (3), it states that websites must obtain "free and informed consent" from their users before accessing or storing any information acquired from their device. It was this article that saw the introduction of 'cookie warnings' on websites, which needed consent before storing information about any specific user.
You can see the report in more detail at the following link: www.law.kuleuven.be/icri/en/news/item/icri-cir-advises-belgian-privacy-commission-in-facebook-investigation