I don't think it is inappropriate or rude, but if you want my honest oppinion, I think this is a loosing battle.
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Once you upload images to the web (fb privacy settings or not, email, whatever) you really honestly have no idea where they will end up. All anyone needs to do is right click and save to their own computer and it will be theirs. Everyone at any event can take pictures with a digital camera, and then the image is theirs to do what they please- so birthday parties, family gatherings, etc. And honestly, any perv with a cell phone camera can take a picture on the street (of course, this wouldn't have any identifiers with it on the net, but if you have a high level of "image issues" they could be out there).
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Pictures on the internet, from this perspective, are Pandora's box. Once you post them on your own fb (or email it), really, privacy or not, any one of your "friends" can repost the image anywhere if they save it. The bottom line is that if you want complete control over pictures... it is a big challenge. And might not even be possible. Shoot. You could even scan in a print photo and poof! It's on the web.
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So, while I don't think it's "confusing", I think that if you really want to make a dent in pictures "out there", don't post them to fb. Email them specifically to people you trust and ask them not to reproduce them. Sucks, but... is what is going on really worth it?
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Then, I think you need to think hard about your personal threshold, as a mom with a camera at a birthday party is, in today's world, most likely going to share them electronically. You should decide how you are going to attempt to deal with this.
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Personally, I've let it go. My own decision (after a lot of thought) is that *everyone* has pictures out there. I don't allow to be taken (or even save on my pc) any pictures that are embarassing or even cute naked baby shots or anything like that. If you look for photos of my kids, you'll find cute pictures of little guys. In today's world, I really connot control their image entirely, and pretty much all American parents are in the same boat. So, I focus more on content. But that is me.Â