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Facebook agrees to pay $10 to each 'Sponsored Stories' victim

Under a new settlement, Facebook agreed to give its users the right to
Under a new settlement, Facebook agreed to give its users the right to "control" how the site uses their faces in ads.
STORY HIGHLIGHTS
  • Facebook agrees to pay users who appeared in its "Sponsored Stories" program
  • Some 125 million U.S. Facebook users appeared in a "Sponsored Story" without consent
  • "Sponsored Stories" turns Facebook "Likes" into potential commercial endorsements

(Wired) -- Facebook is agreeing to pay up to $10 each to users who appeared in the social-networking site's "Sponsored Stories" advertising program without their permission.

The revised settlement agreement (.pdf) to a class action, lodged Saturday, comes two months after a federal judge said he had "serious concerns" with the deal, which originally had provided a $10 million payout to attorneys suing Facebook and $10 million to activist and research groups in what is known as a cy pres award.

Under the new plan offered for U.S. District Judge Richard Seeborg's approval, Facebook and class-action attorneys are proposing that the same size $20 million pot be shared by charity, the class-action attorneys and the 125 million U.S. Facebook users who appeared in a "Sponsored Story" without consent.

Only a small fraction of plaintiffs in a class-action usually fill out the necessary paperwork to collect their rewards. If everybody did in this instance, that would amount to 2 cents each.

Under California law, Seeborg said each plaintiff could be awarded as much as $750 if the case went to trial. Under the new plan, Seeborg has the power to reduce the amount to each victim or give the pot to charity in the event of overwhelming response from class members.

Under the old deal and the new one lodged Saturday, Facebook agreed to give its adult users the right to "control" but not eliminate how the social-networking site uses their faces in ads under Facebook's "Sponsored Stories" program. Minors have the ability to completely opt out.

"Sponsored Stories" basically turns the act of pressing the Facebook "Like" button into a potential commercial endorsement. If a Facebook user clicks the "Like" button for a product or service with a Facebook page, that user's profile picture and name may be automatically used in advertisements for that product or service that appear in the their friends' Facebook pages. Facebook also reserves the right to show such ads on sites other than Facebook.

The suit, (.pdf) filed in April 2011, claimed Facebook did not adequately inform people of the "Sponsored Stories" feature or give them a way to opt out of the advertising program, which began in January 2011. Under the deal, in which Facebook admits no wrongdoing, Facebook agrees to clarify its terms of service:

You give us 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. This means, for example, that you permit a business or other entity to pay us to display your name and/or profile picture with your content or information. If you have selected a specific audience for your content or information, we will respect your choice when we use it.

While the deal offers little future protection to Facebook users, about a dozen privacy groups and universities stand to reap millions under the accord if Facebook users and the class-action attorneys don't exhaust the $20 million pot. Under the deal, the attorneys said they would submit their fee request within three weeks after Seeborg approves the deal.

A hearing before Seeborg in San Francisco is scheduled for Oct. 25.

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Copyright 2011 Wired.com.

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