Facebook has reportedly agreed to pay $10 million to settle a lawsuit concerning its Sponsored Stories advertisements. The settlement brings an end to the lawsuit that alleged Facebook’s Sponsored Stories benefited from its users’ “likes” without giving them compensation or a chance to opt out. It was reported in late May that a settlement had been reached, but no details were given on how much Facebook would have to pay. Now we have learned that the social network would have to pay $10 million. The lawsuit was brought by five of Facebook’s users in 2011. If successful, it could have resulted in billions of dollars in loss for the social network.
Sponsored Stories show up on Facebook for its users, showing them information taken from their friends. This information can include friends’ pictures, names and likes tagged to products and companies. The lawsuit called the advertisements a “misleading advertising scheme.” A Facebook lawyer, Michael Rhodes confirmed the settlement, saying that the $10 million will be given to charity. The settlement must have court approval to become final.
Sources: Reuters, Bloomberg and The Los Angeles Times
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