Judge: 'Sponsored Stories' Settlement Raises Concerns

Facebook-Gavel-A

A federal judge reportedly said on Thursday that he had concerns about the proposed settlement of a class-action lawsuit about Facebook's sponsored stories program.

Despite voicing concerns, U.S. District Court Judge Richard Seeborg in the Northern District of California didn't say whether he intends to scuttle the deal or grant it preliminary approval.

The agreement calls for Facebook to pay $10 million to various law schools and advocacy organizations, and $10 million to lawyers who sued the company on behalf of users. The deal also requires Facebook to give users more control over whether they appear in sponsored stories, which publicizes users' "likes" to their friends.

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But the settlement agreement doesn't allow adult users to opt out of the program. Instead, Facebook has promised to create "a mechanism that will allow users to see and control which actions they have taken that have led to their being featured in sponsored stories ads." (The settlement will require Facebook to allow minors to opt out of sponsored stories.)

The settlement also doesn't require Facebook to pay any monetary damages to users whose images appeared in the sponsored stories program. Seeborg said at the hearing that he wanted more information about why Facebook users won't receive any money, according to Reuters.

If the deal ultimately wins approval, it would resolve a class-action lawsuit filed by five Facebook users. They alleged that Facebook's sponsored stories program violates a California law giving consumers the right to control the use of their names and images in endorsements. That law also specifies that minors' images can't be used in endorsements without their parents' permission. California's law provides for damages of $750 per incident.

Several organizations are opposing the settlement, including Consumer Watchdog and the University of San Diego School of Law's Center for Public Interest Law.

"The proposed settlement is not fair, adequate or reasonable and provides no direct or indirect benefit to class members," Consumer Watchdog said in a letter to Seeborg dated Aug. 1. Consumer Watchdog also criticized the deal on the grounds that users still can't opt out of sponsored stories.

Seeborg took over the case three weeks ago, after U.S. District Court Judge Lucy Koh removed herself from the matter without explanation. Seeborg previously approved a separate controversial class-action settlement stemming from Facebook's Beacon program, which told users about their friends' e-commerce activity.

In that case, Seeborg allowed Facebook to settle the lawsuit by agreeing to pay more than $6 million to create a new privacy organization -- which it would partially control -- and more than $2 million to the class-action lawyers who brought the lawsuit.

A Facebook user and privacy advocate who objected to that settlement appealed to the 9th Circuit, which is still considering the case.

5 comments about "Judge: 'Sponsored Stories' Settlement Raises Concerns".
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  1. Jamil Thompson from PHD, August 3, 2012 at 9:44 a.m.

    There's a very easy way to opt-out of sponsored stories; it's cancelling your Facebook account. When did Facebook use become an institutional right? If web users don't like Facebook's policies, they can simply quit Facebook.

  2. Mike Mcgrath from RealXstream PTY LTD, August 4, 2012 at 12:32 a.m.

    @Jamil I totally Agree except for one small detail. Strictly from a users perspective, if a user want to leave fb and go for another soc net, they would need to be able to export all their posts, pics, videos etc in just a few clicks in the same way that I can withdraw all my funds from bank X and transfer them to bank Y if I am unhappy about their policies. Without this ability there is a degree of lock in which makes your point (which again, I totally agree with) somewhat mute :-(

  3. Steve Kavetsky from AgooBiz, Inc., August 6, 2012 at 11:56 a.m.

    Jamil: I agree with you. Mike: I agreed with your agreement with Jamil until you made the analogy of FB to a Bank. Users' relationships with FB can not be compared to a bank. A bank charges you fees and pays you a small interest when you keep your money with them. You're not inter-connected with other bank members and your bank activities are not shared from your account with other bank customers' activities in their accounts. FB use is totally free so they don't owe you anything if you choose to leave them for another Social network. This is a relationship agreement that each user has accepted when they joined FB. While I'm not happy with the way FB treats its users and many of FB's practices [check out my other comments around the net], I want to be fair to FB and say that users can't expect FB to collect all their posts, pics, videos, etc. when a users decide to stop using their free platform.

    Regarding the attorneys who sued FB on behalf of the users: It's reassuring to know that lawyers "got users' back" so-to-speak but there's one problem...If these attorneys only ensured that they got paid for their work & they did NOT ensure that the offended users got paid for winning the case, then the attorneys come out of this looking like they were in it for the money. Why? Because the offended users' images were used by FB to make money through 'Sponsored Stories' without compensation to the offended users. Having plenty of friend/family attorneys, I'm fully informed as to how attorneys bill their time and how much of it is profit. They should have done better for the users they were representing. Winning a policy change & a new "mechanism" to-be developed by FB is not enough. In this lawsuit there should have been 4 outcomes: 1. Penalize the offender [FB] - DONE. 2. Make necessary changes so the offense doesn't continue - DONE. 3. Pay the attorneys for their services - DONE. 4. Reward the party(ies) that was offended - NOT DONE.

    Steve Kavetsky
    Co-Founder/Pres.
    AgooBiz.com // The Social Commerce Network
    "WE work greater than me"

  4. Stanley Wright from WrightWay4Ucom , August 6, 2012 at 2:03 p.m.

    Fantastic : we put my friend
    "WE work togather than me"

  5. Steve Kavetsky from AgooBiz, Inc., August 6, 2012 at 2:11 p.m.

    Thanks for the kind words Stanley! :-)

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