I know someone can get sued for using someone else's images (meaning, their face is on the photograph) but how come Failblog.org and Break.com haven't been sued yet for those actions? I'm talking about images that can become an internet meme, making fun of other people.
There is something which is called "fair use" that allows for some usage of others logos and pictures. Read up on it if you are interested. Maybe there are actions taken against those two sites you mentioned, just that you are not aware of those actions going on? There is also a very real possibility that people/companies don't know that they are even on there. It's very hard to watch over and cover the whole internet.
"Fair use" applies to copyright law and not to privacy and publicity rights. The rights of privacy and publicity in the United States are governed by state law, not federal law. Accordingly, there is not uniformity from state to state. There are certain rights to use images of people, but many of the uses on the internet, if challenged, would probably violate the pictured individual's rights. As for the sites you mention, look at their terms and conditions. Break.com, for example, states: In addition, the user agrees to indemnify the website if the user's content violates those representations. I suspect that if those sites are contacted by someone claiming that an image violates the person's privacy or publicity rights, the picture is taken down pretty quickly. With tens of thousands of images posted by users, arguing over a particular image is probably not worth the site's effort.