German data protection officials today accused Facebook of “illegally compiling a vast photo database of users without their consent” and demanded that the social network destroy its archive of files based on facial recognition technology, the New York Times reported.

Facebook says that it uses face recognition software to match users’ photos to others and suggest friends to tag in those photos. A user can prevent friends from seeing tag suggestions when they upload photos that look like that user. But this requires opting out through Facebook privacy settings, which Germany notes is a violation of European law.

“The social networking company’s decision to use analytic software to compile photographic archives of human faces, based on photos uploaded by Facebook’s users, has been controversial in Europe, where data protection laws require users to give their explicit consent to the practice,” the Times wrote. “Instead of using such an opt-in system, Facebook assumes users will want to use facial recognition and requires them to opt out instead.”

Germany started investigating Facebook over the practice in June 2011, suspending the investigation in June of this year after failing to convince Facebook to change its practices. But the German data protection commission reopened the investigation today, demanding that Facebook “destroy its photographic database of faces collected in Germany and revise its Web site to obtain the explicit consent of users before it creates a digital file based on the biometric data of their faces,” the article states.

Facebook claims it doesn’t have to do that, in part because the data collection is legal in Ireland, where Facebook’s European operations are based. “We believe that the Photo Tag Suggest feature on Facebook is fully compliant with EU data protection laws,” Facebook said in a statement issued to the Times. “During our continuous dialogue with our supervisory authority in Europe, the Office of the Irish Data Protection Commissioner, we agreed to develop a best practice solution to notify people on Facebook about Photo Tag Suggest.”

Germany could issue a fine, or try to get a court order compelling Facebook to change its practices, but it will be difficult because of the company being headquartered in the US. While Facebook isn’t backing down, it has made one small concession by agreeing to suspend the tagging feature for Europeans who joined Facebook on or after July 1.