Facebook owes 125 million people 2 cents each in proposed settlement

Did Facebook use your face to help sell 55-gallon barrels of personal lubricant? If so, you too may be eligible for a whopping two pennies in compensation, ramping to $10 if you apply.

According to Reuters, Facebook has proposed a new settlement in the sponsored stories class action lawsuit. One hundred and twenty-five million Facebook members, apparently, have been used in various ads created by companies based on those users’ interactions with their products or brands.

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The only problem, of course, is that people had no say in what they essentially started pitching to their friends.

The lawsuit has hung around much longer than Facebook would have liked. It was first reported to be settled in May, then in June when Facebook agreed to add opt-out controls. In each case, however, the settlement was conditional upon judicial approval.

Judge Richard Seeborg rejected the first $10 million settlement for being too low and for not providing funds for the actual Facebook users who were the injured parties.

The initial $10 million offer from Facebook was to go to charity after lawyer’s fees. But the new settlement sets aside $10 million for lawyers right off the bat, which is fairly revealing about what is most likely really driving this lawsuit. The rest of the money would go into a capped fund for affected users, who would be able to apply for a $10 payment individually.

No word yet on whether Seeborg will think $20 million — two solitary pennies for each affected Facebook user — will be enough, but the potential damages could theoretically have been in the billions. For example, if all 125 million affected people applied for the $10 payment, and if the total was uncapped, damages would run as high as $1.25 billion.

I asked Facebook for a comment, and the company issued a statement simply saying: “We believe the revised settlement is fair, reasonable, and adequate and responds to the issues raised previously by the court.”

Facebook sponsored stories have proved to be highly successful, with much higher click-through rates than other Facebook ads.

They also, however, have the potential to be extremely expensive for the world’s leading social network if Seeborg rejects this offer as well.

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