Facebook’s $20m bid to settle a legal battle brought by a group of members who claim its ‘Sponsored Stories’ violated their privacy has been thrown out after the judge questioned the lack of compensation for users.
In an order on Friday, US District Judge Richard Seeborg in San Francisco listed several concerns with the proposed settlement, including a request for more information.
The case has been brought by five Facebook members after they filed a lawsuit seeking class-action status against the social networking site. They claim Sponsored Stories violate California law by publicising users’ ‘likes’ of certain advertisers without paying them or giving them a way to opt out. The case involved 100 million potential class members.
Seeborg wrote: “In this instance there are sufficient questions regarding the proposed settlement that it would not be appropriate simply to grant the motion and postpone resolution of those issues to final approval.”
He said the company and the plaintiffs’ legal team should try to modify their agreement to address his concerns.
However, the social network said: “We continue to believe the settlement is fair, reasonable, and adequate. We appreciate the court’s guidance and look forward to addressing the questions raised in the order.”
As part of the proposed deal, Facebook agreed to better inform users about sponsored stories, to limit their use and to allow people under 18 to opt out of the function.
The company also agreed to pay $10m to a number of research and advocacy groups that work on digital privacy rights, and $10m to cover legal fees for the plaintiffs. But the settlement did not inhibit Facebook from continuing to serve up Sponsored Stories.
One expert hired by the plaintiffs claimed the value to Facebook members resulting from the ad package is about $103m.
