Facebook may owe you $15, thanks to $20 million ‘Sponsored Stories’ lawsuit settlement

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After more than two years of deliberation, a U.S. federal judge in California has granted final approval for Facebook’s $20 million settlement of a lawsuit over its “Sponsored Story” advertisements, reports Reuters. Qualified users who joined the class action suit will receive $15 from the social network for having their photos and names featured in Sponsored Stories. Facebook also promised to give users more “control” over how their photos are used in ads.

In a motion filed Monday, U.S. District Judge Richard Seeborg agreed to a revised settlement that awards $9 million to be divided amongst the approximately 614,000 Facebook users who appeared in Sponsored Stories without their consent, and filed the necessary paperwork to join the class action lawsuit by the May 2, 2013 deadline. Qualified users who failed to meet the deadline will not receive any part of the settlement. The other $11 million will go to attorney and court fees, expenses, and a dozen non-profit groups that promote and research privacy issues, including the Electronic Frontier Foundation and Harvard University’s Berkman Center for Internet and Society.

The suit, filed by five plaintiffs in April 2011, asserted that Facebook improperly used photos and names of people in Sponsored Story ads, which are created by users “liking” companies’ pages or content. The plaintiffs also argued that Facebook violated a California law that forbids companies to use people’s likenesses or names in advertisements without their consent. Finally, the suit asserted that Facebook should have received parental consent to use the names and likeness of any user under the age of 18.

Facebook contends that users automatically consent to appearing in Sponsored Stories because they understand that “liked” content appears in their friends’ newsfeeds; Sponsored Stories are, according to Facebook, simply repackaged and redisplayed versions of content users have already agreed to share with friends.

Judge Seeborg found that, while plaintiffs provided sufficient evidence of injury in a legal sense, the plaintiffs failed to provide adequate support for their complaint of illegality on Facebook’s part. Seeborg determined that had a trial found Facebook in violation of California law, the company would have had to pay as much as $750 per user, or more than $112 million in total. Such a ruling would have, in Seeborg’s words, “threatened Facebook’s existence.”

The ruling stated that the amount paid to class members of the suit is satisfactory, given that the plaintiffs did not show sufficient evidence to prove “that they were actually harmed in any meaningful way” by appearing in Sponsored Stories.

In addition to the $20 million payout, Facebook has also agreed “to provide greater disclosure and transparency as to when and how member’s names and profile pictures are re-published, and to give them additional control over those events,” according to the motion. Facebook must also allow minors to opt-out of Sponsored Stories entirely.

See the full order of final settlement below:

Fraley v. Facebook: Order Granting Final Approval (Document 359)

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