Facebook could use the service to provide advertisers with targeted information such as the nearest ATM. The feature is expected to be similar to Foursquare, a location-based social network that enables users to "check in" with one another and meet up.

Some Internet users have accepted location services as a way to gain information they feel is valuable, such as a coupon for a nearby restaurant or personalized weather services. But others fear it's another example of Big Brother watching and, in this case, knowing where they are.

User Control

Facebook has been working on the feature for more than a year and is expected to make it available to its millions of users, reports say. The company also plans to provide application programming interfaces to third-party developers who want to add location features to their Facebook applications.

The company is tight-lipped about the service. "We are constantly experimenting with new ideas and products internally," said Meredith Chin, a Facebook spokesperson, in an e-mail. "We don't have anything more to share at this time."

Facebook may want to announce the feature at its F8 Conference next month.

U.S. companies offering location-based services must comply with the CAN-SPAM Act, which requires users' consent. Under the 2003 act, companies have given users control of location services on web sites and in mobile apps.

In Europe, the European Union has taken steps to protect users from information gathered through location-based services.

Some companies have taken extra steps by adding privacy-enhancing technologies.

The Rummble Example

Companies hoping to give advertisers ways to target audiences have been implementing location-based services for some time. Rummble, a location-based social network, has been doing so since 2008.

Run by six employees in the U.K. and San Francisco, Rummble lets users create a group of friends and rate and share information such as restaurants and other places. When a user logs in to the site, it displays nearby friends and rated things (rummbles) on a Google map. Google also offers location-based services.

In December, Rummble began offering Rummble for Windows Phone, Rummble for Android, and Rummble for iPhone v1.5.

Other social-networking sites such as Loopt, Mobiluck, Socialight and Zkout also use technology to detect users' locations. New York-based Socialight lets any person, brand or media owner create content and applications by combining both user-created and branded content.