Financial News

  • 30 January 2013, 0:06

Facebook Emails Users Over Sponsored Stories

Facebook may have to pay up to $10 to each of its users whose personal details were used without permission to sell advertising.

The social media giant has sent out legal notices about a class action brought against it in California after profile photos and names were used without consent in its Sponsored Stories feature.

Victims of the unauthorised use of material included children, adults, law institutes and charities.

If they had clicked 'Like' on a product the users' Facebook friends were likely to see adverts related to it on their own pages, along with a photo of the user.

Facebook didn't offer an opt-out to the service, and in April 2011 a group of Facebook users launched legal action against the company over the tactic.

The case has been designated Fraley vs. Facebook.

Last year Facebook sought a settlement by changing its usage terms to clarify the facility and it also said it would put $20m (12.8m) into a settlement fund.

On the weekend Facebook sent an email to affected US users with the subject line "Re: LEGAL NOTICE OF SETTLEMENT OF CLASS ACTION".

Those who did not delete the message as suspected spam now have until May 2 to file a claim, which may give them up to $10 (6.40) each from the pool.

However if too many claims are made and the settlement per person drops below $5, the money will be shared between charities to educate children and adults on social media safety.

Legal fees and costs might take up to 40% of the settlement fund, leaving around $12m (7.6m) to be shared by recipients.

There are an estimated 150 million Facebook accounts in the US, and the final approval hearing for the settlement is on June 28.

On Wednesday, Facebook is due to release its 2012 fourth quarter results, which are expected to show how the company has progressed in monetising the service since flotation.

The company went public last May and the stock price plunged by 53% from the IPO price of $38 (24.20), but has since recovered slowly and on Monday closed at $32.46 (20.66).

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