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Facebook 'sponsored stories' $20 million settlement approved

updated 08:03 pm EDT, Mon August 26, 2013

$10 million going to lawyers, $10 million to charity, privacy rules overhauled

Despite objections from privacy advocates to the contrary, Judge Richard Seeborg of the United States District Court for the Northern District of California approved Facebook's $20 million settlement offer over its controversial "sponsored stories" program. Additionally, the social network must give users more control over how personal content is shared, which Facebook's attorneys places at a value of $145 million. Between January 2011 and August 2012, Facebook charged advertisers $234 million for the program in question.

Facebook's "Sponsored Stories" were advertisements that appeared on a user's Facebook page when a friend "likes" an advertiser, including the friend's name and photograph. The suit claims that the paid post uses user's images and names to advertise products without compensation for advertising purposes in violation of California law.

Seeborg initially questioned why the members of the class-action are not entitled to recover any money from Facebook. Attorney Michael Rhodes representing Facebook said that the parties couldn't come up with an acceptable algorithm to determine the value of a user's involuntary endorsement. Rhodes said the required disclosures and ability for parents to exclude their children from the feature as a result of the settlement are "unprecedented" for a social media website, and told the judge that he believes that it "has a significant benefit to the class."

The settlement terms have already caused one judge to recuse herself from the case, due to her involvement with charities slated to receive payment.

The judge wrote in the settlement amidst concerns from child's right activists and other groups that "while not incorporating all features that some of the objectors might prefer, has significant value." Users who signed up for the class-action suit will receive $15, with the remaining funds going to the lawyers who launched the suit, and other charities.



By Electronista Staff
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  1. Flying Meat

    Dedicated MacNNer

    Joined: 01-25-07

    "Facebook's attorneys places at a value of $145 million. "
    Yeah. That's a 145 million dollar value, but if you act now,...

    "Between January 2011 and August 2012, Facebook charged advertisers $234 million for the program in question."
    Eh, lets see. 234 million - 20 million - 134 million = 80 million dollars profit for doing the wrong thing. Consider yourself punished, FaceBook!

  1. Mike Wuerthele

    Managing Editor

    Joined: 07-19-12

    Yeah, I liked that tidbit too. That and calling the omission of children's information "unprecedented."

    I guess they never heard of COPPA.

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