Facebook Pays $10 Million in Privacy Lawsuit

Facebook must reportedly pay $10 million in a privacy lawsuit for their use of Sponsored Stories advertisements.

Five users sued Facebook stating that its Sponsored Stories violates privacy laws in California. The lawsuit was filed in federal court in San Jose.

The group of users argued that the social media website did not have the right to use their information in ads without their explicit permission.

The lawsuit was settled last month but was not disclosed to the public until Monday.

U.S. District Judge Lucy Koh found that Facebook’s Sponsored Stories could cause “economic injury” by using the likeness of users’ names and pictures. Judge Koh ordered a settlement that requires Facebook to send the $10 million to charity.

“California has long recognized a right to protect one’s name and likeness against appropriation by others for their advantage,” Koh wrote.

The Sponsored Stories are located on Facebook’s sidebar along with a user’s name and profile picture and how he or she ‘likes’ a product, service, or advertisement. The sponsor acts as a recommendation for other users to click the story, but the user does not get compensated for their name being tagged in the ad.

According to Facebook, the Sponsored Stories are worth up to three times more than a regular advertisement on the website.

Facebook agreed to be involved with independent privacy audits for the next 20 years last fall. They must obtain consent from its users when changes to privacy settings are made.

Facebook has already dealt with numerous privacy disputes in the past for releasing users’ names, addresses, and phone numbers to applications.

This case is the first Facebook-related case to make progress in the courts as other cases have been thrown out or failed.