Judge Questions Google's $6 Million Wireless Spam Settlement

Google recently agreed to pay $6 million to settle allegations that its app company, Slide, violated a federal text-spam law by sending SMS messages to people without their consent. The agreement calls for the company to set aside some of that money for consumers, but then donate any unclaimed funds to the International Association of Privacy Professionals.

But the judge isn't ready to sign off on that deal just yet, according to court records. At a hearing earlier this month, U.S. District Court Judge Yvonne Gonzalez Rogers in Oakland, Calif. requested more information about why the IAPP should receive the funds.

This week, the class-action lawyers who represent the consumers filed court papers arguing that a grant to the IAPP is appropriate, given that the organization intends to use the funds to teach companies about the wireless spam law.

The IAPP's President and CEO Trevor Hughes said in a letter to the attorneys that the group intends to use the funds to create a compliance guide to the Telephone Consumer Protection Act -- the law that Google's Slide allegedly violated in this case. That statute prohibits companies from using automated dialers to send text messages to people without their opt-in consent. Numerous companies -- including Viacom, Facebook, Yahoo and Coca-Cola -- are currently facing lawsuits for allegedly sending SMS messages without users' permission.

Rogers' inquiries about the settlement come after numerous Web companies have arrived at similar deals in privacy-related lawsuits. But those agreements seem to face increasing opposition from people who argue that donating money to nonprofits won't do much to compensate people whose privacy was violated.

That issue came up in Facebook's $9 million Beacon settlement -- which some Web users are still opposing. In that case, Facebook promised to fund a new nonprofit to examine privacy issues. The lawsuit stemmed from Facebook's 2007 Beacon program, which told users about their friends ecommerce activity.

Several Facebook users opposed that deal, with some taking their objections to the 9th Circuit Court of Appeals. A divided panel of that court recently upheld the settlement. But just last week, some objectors filed court papers indicating that they intend to ask the Supreme Court to examine the case.

Whether Google's settlement will be approved or not remains to be seen. But the case shows that some judges are taking a close look at whether privacy-related settlements that call for donations to nonprofits are a good idea.

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