Facebook Working On Lawsuit Settlement Over ‘Sponsored Stories’ Advertising

Facebook Sponsored Stories

Facebook has agreed in “principle” to settle a lawsuit filed in April 2011. That lawsuit hurled allegations that Facebook’s “Sponsored Stories” breached user privacy.

The lawsuit claims that Facebook did not provide an adequate way for users to opt out of the advertising program after it was launched in January 2011.

The issue behind Facebook’s “sponsored stories” is that it features a users profile and picture in their friends’ Facebook pages next to advertiser and advertiser products they have already “liked.”

The lawsuit was set to begin oral arguments in a federal courtroom and could have led to a class action lawsuit that would represent millions of Facebook users which explains why the company would rather seek a settlement. In a letter to U.S. District Judge Lucy Koh lawyers wrote that they have executed “a term sheet memorializing their settlement in principle.”

The case comes just months after the Federal Trade Commission settled government charges with Facebook, those charges claimed that Facebook “deceived” users about the privacy of their information which was then “repeatedly” shared with the public.

The FTC determined that Facebook would submit to a privacy audit every two years for the next two decades but they did not hand down a financial penalty against the social network.

At this time users can turn off Facebook sponsored stories under the “Facebook Ads” section located under a users main profile settings.

This isn’t the first time Facebook will likely pay a privacy fine, in 2010 the social network paid $9.5 million to settle a class-action lawsuit that challenged the company’s “Beacon” program which displayed what users were buying or renting from various websites, users did not give their permission to publish that information.

As part of the recent deal Facebook will be required to have users opt in to participate in “Sponsored Stories.”

Facebook officials are declining to comment at this time.

James Kosur

James Kosur has worked in the new media space for the last 10 years, helping many publications build their audiences to millions of monthly readers. He currently serves as the Director of Business Development at Business2Community.com and the CEO of Aven Enterprises LLC.


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