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Facebook to pay 614,000 users $15 each over privacy concerns

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After more than two years of deliberation, a U.S. federal judge in California has granted final approval for Facebook’s $20 million settlement of a lawsuit over its “Sponsored Story” advertisements, reports Reuters.

The suit, filed by five plaintiffs in April 2011, asserted that Facebook improperly used photos and names of people in Sponsored Story ads, which are created by users “liking” companies’ pages or content. The plaintiffs also argued that Facebook violated a California law that forbids companies to use people’s likenesses or names in advertisements without their consent. Finally, the suit asserted that Facebook should have received parental consent to use the names and likeness of any user under the age of 18.

Judge Seeborg found that, while plaintiffs provided sufficient evidence of injury in a legal sense, the plaintiffs failed to provide adequate support for their complaint of illegality on Facebook’s part. Seeborg determined that had a trial found Facebook in violation of California law, the company would have had to pay as much as $750 per user, or more than $112 million in total. Such a ruling would have, in Seeborg’s words, “threatened Facebook’s existence.”

The agreement states that the social media site has to pay approximately 614,000 Facebook users $15 for using their information for advertising purposes. While approximately 150 million Facebook users’ images and likenesses were allegedly used to promote products and services through the Sponsored Stories program, only users who entered a claim form by May 2, 2013 were eligible to receive settlement funds.

As part of the settlement, Facebook will make changes to its Statement of Rights and Responsibilities (SRR) to give users greater information about and control over how they are featured in the Sponsored Stories.

Facebook users cannot currently opt-out of the Sponsored Stories advertisements, though the ads do respect users’ current privacy settings. For example, if a user likes a “Starbucks” page, only his or her friends will be able to see that the “like.” The social media site recommends users adjust privacy settings on their activity log if they are concerned about information featured in Sponsored Stories.

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