Facebook to Settle Sponsored Stories Debacle with $10 Million

June 18th, 2012 at 4:59 pm

Facebook has allegedly agreed to settle a lawsuit involving its Sponsored Stories advertisements to the tune of $10 million.

The suit involves Facebook’s Sponsored Stories, which prosecution claims has benefited the social networking company from its users’ “likes” without providing them compensation or a chance to opt out. The lawsuit was filed in 2011 by five Facebook users.

Reports claim that a settlement has been reached in late May and it was only this recent that we have an idea about the amount Facebook would have to pay. Had the lawsuit continued and became successful, the plaintiffs could have received billions of dollars worth of damages.

Sponsored Stories involve Facebook providing advertisements for its users, all while using information taken from their friends. This information can include their friends’ photos, names, and likes tagged to products and services. The lawsuit claimed such ads are a “misleading advertisement scheme.”

Facebook’s legal representative Michael Rhodes confirmed the settlement to Associated Press, adding that the $10 million will be donated to charity. The deal, however, still needs the judge’s approval.

Source: Los Angeles Times

Photo credit: Paul Sakuma / Associated Press


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