Controversial Facebook Settlement Could Net Nonprofits $10M

Facebook

July 13, 2012; Source: Wired

In a settlement on a suit brought to protect Facebook users from having their faces used without permission in Facebook’s “Sponsored Stories” program, a $20 million dollar settlement is now simply awaiting approval of a federal judge (read a PDF of the settlement document here). Half of the settlement will go to the lawyers who brought the suit and half will go to nonprofits working for consumer and privacy rights.

Wired, however, posits that groups not included in the proposed payout are less enthusiastic than many of the 15 groups that are, writing that the case “ provides a glimpse into the dark side of large class-action settlements: The plaintiff’s lawyers get rich, class members get little and non-profit groups often reap millions by urging judges to approve the deal regardless of its merits.”

Wired asserts that although the settlement language gives consumers the right to limit how Facebook uses their image, but notes that “whether the settlement will allow Facebook users to completely opt out of the program, which turns the act of pressing the Facebook ‘Like’ button into a potential commercial endorsement, is totally unclear in the settlement.”

Mashable points out that Facebook has more than 153 million members in this country, with approximately a third being minors. More than 100 million members’ names and likenesses have appeared in “Sponsored Stories.”

The groups listed as receiving the funds in the settlement document are:

Joan Ganz Cooney Center

$1 million

Center for Democracy & Technology

$1 million

Electronic Frontier Foundation

$1 million

MacArthur Foundation

$1 million

Campaign for a Commercial-Free Childhood

$500,000

Consumers Federation of America

$500,000

Consumers Union

$500,000

Stanford Law School Center for Internet and Society

$600,000

Boalt Hall School of Law Berkeley Center for Law and Technology

$600,000

New York University Information Law Institute

$600,000

Santa Clara University School of Law High Tech Law Institute

$600,000

Harvard Law School Berkman Center for Internet and Society

$600,000

Rose Foundation

$500,000

Connect Safely

$500,000

Wired Safety

$500,000

It’s worth noting that Consumers Union, the publisher of Consumer Reports, has, according to Wired, “rejected [its] $500,00,” with Christopher Meyer, vice president of external affairs with Consumer Reports, stating, “In light of our current high-profile work concerning Facebook, we decided to decline the funds…this was not a reflection on the merits of the settlement.” But a statement on the Consumer Reports website reads, “While Facebook is giving consumers some controls they ought to have, we are seriously concerned the default settings still allow use of names and photos for marketing campaigns without express consent.”

NPQ would love to know what readers think of the settlement and whether or not there is an unethical “dark side” to large class action settlements that advocacy groups would be wise to avoid. –Ruth McCambridge