Privacy & Information Security Law Blog

On August 26, 2013, the U.S. District Court for the Northern District of California approved a settlement with Facebook, Inc., related to the company’s alleged misappropriation of certain Facebook members’ personal information, such as names and profile pictures, that was then used in ads to promote products and services via Facebook’s “Sponsored Stories” program.

The settlement concerns a class action of approximately 150 million Facebook members and a complaint filed in April 2011. The complaint alleged that Facebook did not adequately inform members of the “Sponsored Stories” advertising program, or allow users to opt out of the program, thus resulting in users’ names, photographs and other information appearing in “Sponsored Stories” as endorsements for paid advertisements on their friends’ Facebook pages, without the users’ consent. In some cases this occurred after the individual “liked” a product or service on Facebook or used the “Check-in” feature.

In August 2012, the court rejected an earlier proposed settlement, highlighting the absence of a cash component for the class members. Under the terms of the revised settlement, Facebook will provide a settlement fund of $20 million for (1) payments of $15 to each of the class members who filed claims, and (2) cy pres payments to a number of organizations (such as the Electronic Frontier Foundation) focused on “consumer protection, research, education regarding online privacy, the safe use of social media, and the protection of minors.”

Pursuant to the terms of the settlement, Facebook also is required to makes changes to its terms of service (the Facebook Statement of Rights and Responsibilities), and implement additional mechanisms to better inform users, including about how to control how their information is used in connection with the “Sponsored Stories” program. The court noted that “although the monetary relief to each class member is relatively small and the percentage of class members who submitted claims is limited, the settlement as a whole provides fair, reasonable, and adequate relief to the class … including the low probability that a substantially better result would be obtained through continued litigation.”