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Facebook wins preliminary OK of 'Sponsored Stories' settlement

Social network agrees to pay $10 to each user who objected to having his or her name and image associated with ads.

Facebook has won preliminary approval of a proposed settlement of a class-action lawsuit filed over the social network's use of members' names and images in advertising.

Under the settlement's terms, Facebook agreed to pay $10 to each user who objected to being included in the social network's "Sponsored Stories" advertisements, as well to initiate user controls that allow people to be excluded from the program.

U.S. District Judge Richard Seeborg said today that the settlement "has no obvious deficiencies" and "appears to be the product of serious" negotiations between lawyers for Facebook and the group of Facebook users who brought the lawsuit last year, according to a report in the San Jose Mercury News.

In a brief statement, Facebook said it was pleased with the preliminary approval of the settlement.

Facebook's Sponsored Stories ads essentially displayed a user's name, picture, and a tagline asserting that the person "likes" a particular advertiser. These ads initially appeared only in Facebook's right column, but the social network soon moved them directly into users' news feeds, identifying them as "sponsored" stories.

The original five plaintiffs claimed that the social network violated users' right to privacy by publicizing their "likes" in advertisements without asking for permission or offering compensation.

This is the second settlement proposed in the lawsuit. The first, reached in May, was rejected by Seeborg after U.S. District Court Judge Lucy Koh backed out of the case.