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Facebook to shell out $20m compensation in Sponsored Stories advertising row

Facebook will pay out $20m (£13m) between lawyers, internet privacy rights groups and the social network’s users for using members’ likes as advertising endorsements in its Sponsored Stories feature.

Ruling: Facebook will pay out $20m in compensation

US District Judge Richard Seeborg approved the settlement, which is a fraction of the billions being sought after it emerged Facebook’s Sponsored Stories used members’ names to advertise products on account of whether they had ever liked it on the social network. However, Facebook never asked permission from members to use their product preferences as an advertising hook, raising breach of privacy fears.

The lawsuit was filed in 2011 and Judge Seeborg estimated the size of the class action – a form of lawsuit which allows a large group of people to collectively bring a claim to court – at around 150 million people but said that so few had actually filed claims that the settlement fund would provide ample money to cover compensation.

“The settlement as a whole provides fair, reasonable and adequate relief to the class, in light of all the circumstances, including the low probability that a substantially better result would be obtained through continued litigation,” he said.

The judge rejected an original settlement offer for the same amount that did not allocate compensation to Facebook members. Negotiators proposed paying $15 to those who filed claims, which would leave enough in the pot of money to cover legal fees and payments to internet privacy groups.

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