Judge Approves $20m Facebook Privacy Settlement

Facebook has agreed to make changes to its Statement of Rights and Responsibilities as part of a $20m class-action settlement covering the use of names and likenesses in advertising

A California judge on Monday gave final approval to a $20m (£13m) settlement in a class action lawsuit that had charged Facebook with violating users’ privacy through the use of their names and likenesses in its Sponsored Stories advertising programme.

Privacy advocates objected that the settlement’s terms don’t go far enough, but US District Judge Richard Seeborg in San Francisco found that the settlement, “while not incorporating all features that some of the objectors might prefer, has significant value“.

Privacy changes

The settlement will see payments of $15 each distributed to Facebook members who submitted valid claims, with expenses such as administrative costs and attorneys’ fees also to be paid through the settlement fund.

Facebook will also be required to make changes to its Statement of Rights and Responsibilities which will give users more information about, and control over, the use of their names and likenesses.

zuckerberg facebook © Kobby Dagan ShutterstockPlaintiff lawyers estimated these changes have a value of up to $145 million. According to court documents, advertisers paid Facebook nearly $234 million through Sponsored Stories between January 2011 and August 2012.

The settlement covers about 150 million users whose names and likenesses were allegedly misappropriated in connection with the Sponsored Stories programme.

Sponsored Stories displays a user’s name and profile image and a tagline indicating that the user “Liked” a particular advertiser. The messages were initially displayed in the site’s right-hand column, but were later moved directly into a user’s news feed.

Profit drive

The programme is part of Facebook’s drive to derive profits from the personal data of its users. The company has been under investor pressure to enlarge such profits since a disappointing flotation last year.

The case notably involved the issue of the privacy of minors, with organisations such as Public Citizen, which represented six parents in the proceedings, arguing that Facebook should seek the consent of members, or of their parents in the case of minors, before using their names or likenesses in advertising.

In Monday’s ruling Judge Seeborg observed that the parties in the case had not been able to find much in the way of common ground.

“The record leaves no doubt that this settlement was the product of arms-length negotiations and compromise,” he wrote.

Indeed, an initial settlement proposed in May of last year was rejected by Judge Seeborg. The current settlement, proposed in October 2012, added the $20m in compensation and the commitment to give users more control over the use of their names and liknesses.

Legal controversy

Privacy groups such as Public Citizen have argued that the changes still place the burden upon users, or upon the parents of users who are minors, to opt out of advertising programmes such as Sponsored Stories.

Public Citizen argued that users should rather be presented with an “opt-in” for such programmes, and that indeed, in the case of minors, such an “opt-in” measure is required by law in the US states of California, Florida, Tennessee, Virginia, Wisconsin, New York and Oklahoma.

Scott Michelman, a staff attorney with Public Citizen, stated that the ruling “gave short shrift to kids’ online privacy rights and will enable Facebook to continue exploiting minors’ images for profit in violation of the laws of seven states”.

A Facebook spokesman said the company is “pleased that the settlement has received final approval”.

Facebook faces a possible EU lawsuit in Ireland based on a privacy campaign launched by an Austrian law student.

Do you know all about IT and the law? Take our quiz.