Facebook proposes $20m settlement in ad product suit


Proposed settlement would see those involved in class action lawsuit against social network receive up to $10 each.

Facebook Inc. has proposed a revised $20 million settlement to end litigation filed against the social site by users alleging one of its tailored advertising services has resulted in privacy violations.

Under the proposed settlement, members of the class who sued Facebook last year over its Sponsored Stories advertising product could claim a cash payment “of up to $10 each, to be paid from a $20 million total settlement fund,” according to a filing in federal court in San Francisco over the weekend.

In addition, the settlement would include new disclosures by Facebook about how Sponsored Stories works and ways to control to the ad service.

The revised proposal follows a previous settlement pitched by Facebook that would have included a $10 million payment made to cover plaintiffs’ lawyers fees and a $10 million payment to privacy-related charities.

Plaintiffs filed suit against Facebook in March of last year, alleging that virtually checking into a location on Facebook, or using a “Like” button on the site could force them to take part in Sponsored Stories advertising.

Sponsored Stories enable businesses and other advertisers to promote themselves by having Facebook users tout them to contacts on the site.

The ad program was the first used by Facebook on mobile devices, where the company has widely been seen to lag behind in terms of generating advertising revenue compared to desktop computers.

In a motion to dismiss the case filed in May, Facebook said that plaintiffs filing suit over Sponsored Stories had already “consented to the alleged use of their names and likenesses that they now challenge.”

The company also argued that being inhibited from republishing information its users have already posted would raise “First Amendment concerns.”

As Facebook seeks to leverage its connection to a vast audience that now numbers over 1 billion and regularly deposits personal information on the site, the company has occasionally run into troubles over privacy concerns.

A separate lawsuit filed against the site over its Beacon feature that automatically sent information about users to contacts on the site ended with a $9.5 million settlement, according to court filings.