Facebook Files Amended Settlement In Sponsored Stories Suit

By David Cohen 

After the rejection of its original settlement proposal in a lawsuit over the use of users’ images in sponsored stories by U.S. District Court Judge Richard Seeborg in August, the social network filed an amended settlement Friday, in which affected users will actually receive some of the funds, albeit not much.

InformationWeek reported that the amended settlement provides for one-time cash payments of $10, or, if more than 1 million Facebook users file claims, an even split of the $10 million pool between them. If the settlement amount drops below $5 per users, the administrator can either split the $10 million equally, or distribute all of the money to privacy organizations.

The fact that affected users were not slated to receive any funds was a major sticking point with Facebook’s original settlement offer, and Seeborg wrote in his August order:

There are serious concerns with the provision of the settlement agreement permitting plaintiffs to apply for up to $10 million in attorney fees without objection by Facebook. The fact that the parties negotiated that “clear sailing” provision separately from the cy pres payment does not wholly eliminate the concern that class counsel may “have bargained away something of value to the class.”

If, and to the extent, that only a much smaller fee award can ultimately be justified here, then the fact that Facebook has agreed to pay up to $20 million (plus up to $300,000 in costs) to resolve this action may be of some consequence in evaluating the adequacy and fairness of the cy pres amount.

Other revisions to Facebook’s settlement included, as reported by InformationWeek:

  • Facebook agreed to provide users with an easily accessible method of reviewing all of their sponsored story interactions, including related content of theirs that may have been used.
  • Facebook agreed to revise its terms of service to make it clear that users agree to give the social network permission to use your name, profile picture, content, and information in connection with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us.”
  • Users under 18 are attesting that their parent or legal guardian has agreed to those terms.

Readers: Do you think Facebook’s amended settlement will pass muster with Judge Seeborg?

Image courtesy of Shutterstock.