Reuters – Facebook has agreed to pay $10 million to charity to settle a lawsuit accusing the site of violating users’ rights to control the use of their own names, photographs and likenesses, according to court documents.
The lawsuit, brought by five Facebook members, alleged the social networking site violated California law by publicising users’ “likes” of certain advertisers on its “sponsored stories” feature without paying them or giving them a way to opt out.
A “sponsored story” is an advertisement that appears on a member’s Facebook page and generally consists of another friend’s name, profile picture and an assertion that the person “likes” the advertiser.
The settlement was reached last month but made public this weekend.
Facebook has declined to comment.
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, according to previous court documents.
In the lawsuit, Facebook chief executive Mark Zuckerberg was quoted as saying that a trusted referral was the “Holy Grail” of advertising.
In addition, the lawsuit cited comments from Facebook chief operating officer Sheryl Sandberg, saying the value of a “sponsored story” advertisement was at least twice and up to three times the value of a standard Facebook.com ad without a friend endorsement.
United States District Judge Lucy Koh said the plaintiffs had shown economic injury could occur through Facebook’s use of their names, photographs and likenesses.
“California has long recognised a right to protect one’s name and likeness against appropriation by others for their advantage,” Justice Koh wrote.
The settlement arrangement is known as a cy-pres settlement, meaning the settlement funds can go to charity.
Facebook shares closed at $US30.01 on Friday, down 21 per cent since the company’s initial public offering last month.