Facebook Settles ‘Sponsored Stories’ Lawsuit For $10 Million
The popular social network Facebook has agreed to pay $10 million to charity in order to settle a lawsuit filed by members who accused the website of violating their rights by using their names and likenesses without permission, according to various media reports published Sunday.
Five members of Facebook filed suit in a San Jose courtroom, accusing the social media site of violating California state law by publicizing their “likes” of specific advertisers.
The accusers alleged that Facebook’s “Sponsored Stories” campaign used the names and images to promote other firms without offering those users compensation or a way to opt out of the program, Dan Levine and Sarah McBride of Reuters wrote on Sunday.
The settlement was reached last month, according to Levine and McBride, but was not made public until this past weekend. Had the proposed class-action lawsuit proceeded, nearly one-third of all Americans could have been involved, and damages could have totaled billions of dollars, they added.
“Sponsored Stories,” VentureBeat‘s John Koetsier explained on Saturday, “are ads created by companies out of users’ interactions with their products or brands. The example that Facebook gives is a user liking a company’s page, which is then used to market that company to the user’s friends.”
Koetsier said that Sponsored Stories are far more successful than other types of ads featured on Facebook, boasting click-through rates between 20% and 46% higher than the average advertisements. However, California law recognizes an individual’s right to own and control their own name and likeness, meaning that they cannot be used by companies for promotional purposes without those individual’s consent.
“US District Judge Lucy Koh was satisfied the plaintiffs had shown economic injury could occur from Facebook’s use of their names, photographs and likenesses, though it wasn’t made clear exactly how,” Joe Svetlik of CNET UK said. “I can see why they would be annoyed, and don’t think their likenesses should be used this way, but I don’t see how they’ll suffer financially.”
However, as he also noted, “It’s not the first time the social network has been in hot water over privacy concerns. It was previously criticized for activating facial recognition without asking permission, doling out your phone number, and telling everyone where you are until you tell it not to.”