Social networking website Facebook Inc. has settled to pay a charity the amount of $10 million (R82.67 million) to settle a North District of California lawsuit over the ads - namely, "Sponsored Stories". According to reports, the suit accused Facebook for monetizing user's 'Likes', 'Posts', and 'Check-Ins' by selling them as ads on their friends' timelines.
The case was settled last month, but it was made public this weekend. Till now, Facebook has reportedly declined to comment on the same.
Launched back in January 2011, "Sponsored Story" is an advertisement that appears on a member's Facebook page and Facebook's service allowed companies to pay to retransmit users' activities to their friends' pages. If a user clicked the "like" button for a brand, the click might show up as a "sponsored story" on friends' pages.
This lawsuit was filed by five Facebook members, saying that Facebook used their images for commercial activity. Facebook had argued that the plaintiffs did not show they were hurt by the practice.
Moving on to the same, court documents from late last week have suggested that a settlement has been reached. Facebook attorney Michael Rhodes confirmed on June 17 about the same, however, a judge still needs to approve the settlement.
Reuters first reported the details of the settlement.
According to Reuters reports, the proposed class-action lawsuit, filed in federal court in San Jose, California, could have included nearly one of every three Americans, with billions of dollars in damages, as per the previous court documents.
In the lawsuit, Facebook Chief Executive Mark Zuckerberg was quoted saying that a trusted referral was the "Holy Grail" of advertising, as reported in Reuters.
Reuters further reports that "the settlement arrangement is known as a cy-pres settlement, meaning the settlement funds can go to charity."
The case in U.S. District Court, Northern District of California is Angel Fraley et al., individually and on behalf of all others similarly situated vs. Facebook Inc., 11-cv-1726.
