Tuesday, October 9, 2012

Facebook Inc (NASDAQ:FB) offers new settlement for Sponsored Stories legal suits

Facebook Inc(NASDAQ:FB)’s innocuous `Sponsored Stories' feature is proving to be costing the company millions of dollars in legal suits and pay-outs.

Sponsored Stories is just an unobtrusive form of advertising where uses see their friends like a certain product or page and may also be induced to like and click on those ads.

However some users have seen it as an invasion of their privacy as their names and photos have been used in the `Sponsored Stories'. Class action suits have been filed and the company’s efforts to settle them have not been successful.

The social networking site has offered to make its settlement terms more attractive and compensate millions of users whose names and pictures have been used in the Sponsored Stories ad with $10 each.

Earlier this year it offered a settlement with a $10 million pay-out in plaintiff lawyers fees and another $10 million in contributions to a dozen research and advocacy groups. The settlement amounts were however rejected by U.S. District Judge Richard Seeborg who wanted to know how the amount was arrived at.

The revised settlement was filed Saturday and was first reported by Reuters on Monday.

It offers to split the $20 million differently. According to the report - "It would allow users to lay claim first - for $10 apiece. It would then disburse the remaining amount to plaintiffs’ lawyers and privacy-related charities. The court filing does not explain how the lawyers’ fees will be calculated. It indicates that 125 million Facebook users have been affected by the practice."

The next hearing on the matter is fixed for October 25.

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