This was a bad weekend for Facebook, LOLapps, and the myth that private privacy exists online.

All quizzes, and games by LOLapps (including the popular Critter Island) were suspended from Facebook this weekend with no explanation.

That is, until the Wall Street Journal released a report that many Facebook apps have been transmitting identifiable information to multiple advertising and Internet tracking companies. Though you can make your information private, all it takes is a little bit of coding and a smidgen of evil to connect the public Facebook ID with anything public or private, including names and friends.

The main culprit in the online article was RapLeaf, Inc., a data-gathering company that linked Facebook user ID information obtained from apps to its own database of Internet users, which it then sold to third parties.

Apparently, LOLapps had a partnership with RapLeaf. When Facebook learned of this privacy issue and it’s PR team found out about the WSJ article, they immediately suspended all of LOLapp games for breaching its privacy policy.

Once LOLapps suspended its relationship with RapLeaf, it’s games and apps are back on Facebook.

Unfortunately for LOLapps and Facebook, the privacy issue (for now) has been resolved but the damage is done.

In a post on his company’s blog, LOLapps founder Arjun Sethi explained:

“It has been a big weekend in the news for privacy and Facebook applications. As tonight’s Facebook developer blog post states, ‘In most cases, developers did not intend to pass this information, but did so because of the technical details of how browsers work.’ This statement applies to Lolapps.

When we were informed of the issue the relationship that put us into this category was immediately dissolved. Since Lolapps was founded in 2008, we have always been committed to Facebook’ platform policies and will continue to be as we grow.”

I like LOLapps and respect their management team a lot. However, I’m having trouble buying into this explanation it was just a technical error. Though LOLapps surely did not know what RapLeaf was doing, why were they partnering with a direct marketing firm in the first place?

Just as important, I almost would feel better if LOLapps stated they made an error of judgment, apologize, and say it will never happen again then blame it on a technical error on not knowing how browsers work.

Though I think that LOLapps may be a scapegoat and that they probably did not do anything more wrong that other social game app companies out there (the WSJ story states many game apps were guilty), I would prefer a more detailed explanation to be sure this never happens again.

Regardless of the explanation, I do predict much like Jack in the Box was after their E-coli scare, LOLapps will be a lot more obsessed with public privacy issues for a very long time.

As for Facebook, this is yet another privacy concern exposed by the national media. Facebook did a good job to limiting public relations damage by immediately suspending the apps until they fixed the problem. Facebook had to make this move because privacy is number one for a social network, more so than games. In doing so, however, they reminded every social game company that lives and dies on Facebook that Facebook has the power to bring down your entire business by the flick of a switch.

Finally, what does this mean for online privacy? If you are one of those people who dislike Facebook games because of privacy concerns, you have yet another reason not to play social games. However, if you really feel that strong about your private policy, you probably should not be playing or buying games online or on the Web reading this article in the first place. The idea of 100% private privacy in an online world is a myth. If you play games, search for anything, buy products, or for that matter, use a credit card online or offline, there is a risk. The fact is that I have never been a victim a privacy breach online (that I know of). I have had my personal information stolen once. How? I bought a dinner at a restaurant with my credit card and the waiter stole my number.

Facebook and social game app companies have to continue to do a much better job at ensuring private policy, but the only solution for users to be vigilant and acknowledge that in a digital age where all our games are online, there is not an 100% foolproof solution to this problem.

More good sources on this story: VentureBeat and InsideSocialGames.