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October 09, 2012

Facebook Puts Forth New Settlement for Sponsored Stories Lawsuit

By Oliver VanDervoort, Contributing Writer

While Facebook (News - Alert) is the most popular social networking site in the world, the company is not anywhere near infallible or untouchable. The company has actually come under quite a bit of scrutiny over the last few years in how they use their members’ information. The company took on a new kind of ad strategy, called Sponsored Stories that has been met with one angry Facebook user after another and at least one lawsuit. Now, the company is offering a rather lucrative settlement for that lawsuit with a reported $20 million figure as the carrot.

Image via Shutterstock

This particular offer comes on the heels of a previous attempt to dismiss the lawsuit that a district judge eventually rejected, leaving the social networking site looking for a way to make their Sponsored Stories problem fade into the background. For a social networking site, bad publicity can be drag on their popularity and revenue.

The company’s previous attempt to settle was rejected mainly because the judge overhearing the case didn’t understand why no money was set aside to give to Facebook users. The initial agreement set aside $10 million to give to charities but gave no money to the people who were involved in the lawsuit. This new settlement agreement would lay out $10 million for plaintiff’s lawyers fees and would dedicate the other half of the money would be set aside for Facebook users to each file for an amount that topped out at $10 per person.

"We believe the revised settlement is fair, reasonable, and adequate and responds to the issues raised previously by the court," Andrew Noyes, a Facebook spokesman, said in a statement on Monday. Facebook is wanting to get this particular case off its docket if for no other reason than the company doesn’t want to have this dwelling over them as they attempt to move on and bump up their stock price.

Edited by Brooke Neuman

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