By Maggie Shiels
Technology reporter, BBC News
Privacy concerns have dogged the social networking site for some time
German officials have launched legal proceedings against Facebook for accessing and saving the personal data of people who do not use the site.
Facebook could face fines of tens of thousands of euros under privacy laws.
The social networking firm confirmed it had received a letter about the action.
"We consider the saving of data from third parties, in this context, to be against data privacy laws," said Johannes Caspar, head of Hamburg's Data Protection Authority.
Mr Caspar said he had received a number of complaints from people who had not signed up to Facebook, but whose details had been added to the site by friends. He accused Facebook of saving private data of non-members without their permission, to be used for marketing purposes.
Switzerland is also reported to be concerned about the use of third-party data.
Facebook has until 11 August to formally reply to the legal complaint against it.
The California-based company told the BBC in an email that it was "currently reviewing (the complaint) and will readily respond to it within the given time frame".
"Millions of Germans come to Facebook each day to find their friends, share information with them and connect to the world around them," wrote spokesman Stefano Hessel.
Facebook has nearly 500 million users worldwide but according to figures by ComScore is only the fourth biggest social network in Germany.
This is not the first time the social networking site has landed in hot water with data protection officials.
At the beginning of the year, Canada's privacy commissioner launched an investigation into the site following complaints about privacy policies.
Facebook was started as a way for students to share information
And back in May, Facebook faced a storm of criticism for the way it handled members' data after unveiling new privacy settings.
A number of US senators made public calls at the time for the company to rethink its privacy safeguards.
Consumer Watchdog said it was not surprised that Europe was driving this latest legal action against Facebook.
"There are much stronger privacy laws in Europe than here, where privacy is viewed as a consumer protection issue as opposed to a fundamental human right," the group's John Simpson told BBC News.
"We see that a number of Silicon Valley companies don't really understand how seriously privacy issues are taken in Europe and they will continue to run afoul of data protection laws there. I also think there is a growing reaction in the US that we should beef up our privacy laws along the lines of those in Europe."
Germany has some of the world's most stringent data-protection laws, while the Hamburg Data Protection Authority has a reputation for taking possible privacy breaches by internet companies seriously.
The Street View car takes photos for the service
It was the first to launch an investigation into search giant Google for intercepting personal data from unsecured wireless networks while gathering photos and data for its popular Street View project.
That investigation is still going on, although last week Google said it was close to handing over the data it had collected to German officials.
A number of other countries have also launched investigations while more than 30 states in the US are considering pooling resources to investigate whether Google broke any laws.