Facebook proposes new $20 million deal for ‘sponsored stories’

New York: Facebook Inc. has proposed a revised $20 million settlement in a class-action lawsuit accusing it of violating users’ rights through its Sponsored Stories advertising feature after a US judge ruled a had rejected earlier agreement.

The new settlement agreement, filed Saturday in U.S. District Court in San Francisco, drops provisions that would provide up to $10 million for plaintiffs’ attorneys’ fees and allows users to make cash payments of up to $10 each to apply for dollars.

US District Judge Richard Seeborg rejected an initial settlement proposal on Aug. 17 after questioning why the agreement did not provide money for Facebook users.

The original agreement provided no money for class members, instead providing $10 million to charities working on internet privacy issues.

The new agreement, which is also subject to Seeborg’s approval, provides for a portion of the funds to go to charity, but only if there is any left over after users’ claims, legal fees and other expenses have been settled.

But given the size of the class, the charities could still get some money. The agreement provides that if it is not economically justifiable to pay all users a cut, the court can give the entire fund to the charities.

The proposed settlement affects nearly 125 million people, court documents show. The $20 million equates to less than 2 cents per class member.

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“We believe the revised settlement is fair, reasonable and reasonable and addresses the issues previously raised by the court,” said Andrew Noyes, a spokesman for Facebook, on Monday.

Richard Arnes, an attorney for the plaintiffs, did not immediately respond to a request for comment.

The lawsuit, filed in 2011, alleged that the social networking site’s Sponsored Stories feature violated California law by publishing advertisers’ likes without compensation or an opportunity to opt out.

As part of both settlement proposals, Facebook also agreed to give users more control over how their names and pictures are used.

Facebook’s revised agreement also includes new terms for targeting children.

Facebook said it agreed to encourage new users to indicate who else is a member of their family on the site. Parents can unsubscribe their child directly from the Sponsored Stories feature once their relationship with the child is confirmed.

Unlike the earlier settlement agreement, Facebook also now has the right to oppose the plaintiffs’ attorneys’ fee claims. It was unclear how much the plaintiffs’ lawyers would charge with the new settlement.

Facebook shares closed at $20.40 on Monday, down about 2.4%. Reuters


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