Moving forward, the company is now taking another shot at a “Sponsored Stories” settlement, consenting to pay up to $10 apiece to affected consumers and to set up way for users to provide a simpler way to review all Sponsored Stories interactions.
As a matter of fact, the social media giant first attempted to settle the case several months ago, but a judge rejected the settlement in August, saying he had “serious concerns” with the pact. In particular, the judge wondered how the parties determined the $20 million settlement amount to be paid out by the social network. The amount included $10 million that was earmarked for attorneys’ fees and expenses.
Under the new agreement, filed Friday, Facebook has to give a one-time cash payment of $10 to all authorized claimants.
Moreover, Facebook has also promised to create an “easily accessible mechanism” offering greater user control that will enable users to view going forward the subset of their interactions and other content on Facebook that may have been displayed in Sponsored Stories, and the ability to prevent further displays of these Sponsored Stories.
In addition, parents of Facebook users who are under the age of 18 are able to opt their children out of the program. If a minor’s parents are not also on Facebook, the child will be kept off Sponsored Stories until he or she turns 18.
“Although it is not a precise science, plaintiffs must show that the cy pres payment represents a reasonable settlement of past damages claims, and that it was not merely plucked from thin air, or wholly inconsequential to them, given their focus on prospective injunctive relief,” Judge Seeborg added.
In particular, the settlement relates to a class action lawsuit filed in U.S. District Court in California in 2011 by Angel Fraley and others in which they alleged that Sponsored Stories constitute “a new form of advertising which drafted millions of (Facebook members) as unpaid and unknowing spokepersons for various products,” for which they were entitled to compensation under California law.
However, the new proposed settlement, which also needs Seeborg’s approval, covers nearly 125 million users in the class, which could see each member getting a few cents on a pro-rata basis if all file claims.
Nevertheless, Sponsored Stories is one of the latest straw in Facebook’s hat to make more money from advertising. But the feature has encountered some sharp concerns about privacy, and some people have been upset that it publicizes users’ “Likes” to their Facebook friends but does not pay them for the endorsements or allow them to opt out.