Judge Richard G. Seeborg of the United States District Court in San Francisco rejected Facebook’s settlement offer with regard to a class-action lawsuit filed last year. In the suit, the plaintiffs argued that Facebook violated California law by publicizing users’ “likes” of certain advertisers through the method of Sponsored Stories. Sponsored Stories allowed the company “liked” to place the users’ name and picture in advertisements to the users’ friends. Companies paid Facebook for this type of advertising, but Facebook did not pay users nor give them a way to opt out.
The proposed settlement offer required Facebook to better inform users about Sponsored Stories, to limit their use and allow people under 18 to opt out. Facebook also agreed to pay $10 million to several groups that focus on digital privacy rights. Attorney fees were also set at $10 million. However, the settlement offer did not require Facebook to stop using the Sponsored Stories advertising.
Judge Seeborg wanted clarification about whether the millions of Facebook users whose names and pictures had already been used would be granted any relief. He also raised concerns about the value of attorney fees, asking if the plaintiffs’ lawyers bargained away something of value in exchange for their large fee.
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