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Facebook offers to pay users in “Sponsored Stories” settlement

The company’s second try at an agreement addresses reason why the initial settlement was rejected

Facebook’s “Sponsored Stories” advertisements—which show a user’s friends “liking” products and services—aren’t just annoying the social network’s users anymore. They’re causing a big headache for the company, too, which is facing a lawsuit over the ads. Five Facebook users sought class action status, claiming that the company did not offer members compensation or the choice to opt-out instead of having their likenesses used for the Sponsored Stories.

After U.S. District Judge Richard Seeborg rejected the initial settlement, in part because it didn’t offer any compensation to users, Facebook came back on Saturday with a new agreement. The initial settlement offered $10 million in plaintiffs lawyers fees and $10 million to various privacy research and advocacy groups. The new deal would allow users to stake a claim first, receiving up to $10 each, and would then disperse the remaining money among plaintiffs lawyers and charities.

Nearly 125 million people would be covered by this settlement, meaning if they all were to stake a claim, they would receive less than 2 cents each.

"We believe the revised settlement is fair, reasonable, and adequate and responds to the issues raised previously by the court," said Facebook spokesperson Andrew Noyes.

Seeborg will hear the matter for approval on Oct. 25.

Read more at The New York Times and Thomson Reuters.


For other lawsuits faced by Facebook, check out these InsideCounsel stories:

University of California hits Facebook, Wal-Mart and Disney with patent suit

Facebook users sue company for $15 billion

Yahoo sues Facebook over patents, as promised

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