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Facebook wins final approval for 'Sponsored Stories' settlement

The social network pays out $20 million and adds more user controls to settle a lawsuit over a feature that publicized users' "likes" on advertisements without permission or compensation.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read
This is a Sponsored Stories ad unit. In this image, the names of the Facebook users referenced in the ad have been grayed out in the upper left corner. Facebook

It appears the road has finally come to the end in Facebook's "Sponsored Stories" lawsuit. US District Judge Richard Seeborg gave final approval to the suit's $20 million settlement on Monday.

"While not incorporating all features that some of the objectors might prefer, [the settlement] has significant value," Seeborg wrote in an order on Monday, according to Reuters.

The crux of the case focuses on Facebook's use of advertising in its Sponsored Stories. The original five plaintiffs, who aimed at representing more than 100 million members in a class-action suit, claimed the social network violated users' right to privacy by publicizing their "likes" in advertisements without asking them or compensating them.

When the legal complaint was filed in 2011, Facebook's Sponsored Stories ads 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 then the social network moved them directly into users' news feeds, identifying them as "sponsored."

Since the case was originally filed, it's had its fair share of drama. A first settlement was reached in May 2012, but was later rejected by the judge. Then, in October 2012, Facebook brought a new settlement offer in which the company agreed to pay $20 million to compensate class-action plaintiffs, as well as initiate user controls that allow people to be excluded from the program. This offer got preliminary approval from the judge in December 2012.

Since the preliminary settlement approval, the plaintiffs and children's advocacy groups have opposed Facebook's offer saying that it doesn't go far enough to protect underage users. They have said that rather than an opt-out feature for ads using content from children under the age of 18, there should be an opt-in feature. This way the burden of responsibility is lifted from the parents.

However, by finally agreeing to Facebook's settlement offer, it appears that the judge sees Facebook as doing enough to clean the slate. When contacted by CNET, a Facebook spokesperson said, "We are pleased that the settlement has received final approval."