The report suggests that the social media giant places "too much burden" on users, making the process tricky while opting out of certain feature.
The report claims that the social media major fails to give adequate information about how the user data is used for advertisements.
The report further accuses Facebook for not providing options to opt out from collecting location information via its smartphone app.
The report says: "Facebook’s Statement of Rights and Responsibilities (SRR) contains a number of provisions which do not comply with the Unfair Contract Terms Directive. These violations were already present in 2013, and they are set to persist in 2015."
EU is trying to impose new rules on data protection, which is aimed at blocking the present law created back in 1995.
Facebook with its cartoon dinosaur tried to simplify the privacy settings and also introduced opt-in instead of opt-out to address privacy concerns that the company is collecting sensitive location data without prior permission of the users.
The Financial Times reported Facebook spokesperson as saying: "We’re confident the updates comply with applicable laws."