Facebook has agreed to pay $40 million to settle class-action complaint accusing the company of inflating video metrics by up to 900%, according to court papers filed late last week.
If accepted by U.S. District Court Judge Jeffrey White in Oakland, California, the deal will resolve a legal battle dating to 2016, when marketers alleged that misrepresentations by Facebook resulted in inflated prices for video ads.
The settlement agreement calls for at least $28 million to be distributed to advertisers on a pro-rata basis “directly proportional to the amount they spent on video advertising.”
Lawyers representing the class could receive up to $12 million.
The allegations stemmed from a 2016 news report that Facebook inflated the average time spent viewing ad clips by 60% to 80%.
The company has said its mistaken calculation did not affect billing.
But the marketers who sued -- including LLE One (which does business as Crowd Siren and Social Media Models) -- said the erroneous statistics led them to believe video ads on the platform were more valuable than they actually were, which led to higher prices.
Last year, the marketers amended their complaint to allege that Facebook underestimated the impact of its errors, and that average viewership metrics were actually inflated by 150%-900%.
Facebook and the marketers said in June they had agreed to resolve the lawsuit, but didn't reveal details until Friday. The settlement came about after a mediation conducted with assistance from a retired federal judge.
A Facebook spokesperson said the lawsuit is meritless, but added that the company believes "resolving this case is in the best interests of the company and advertisers."
Facebook still faces a separate class-action complaint accusing the company of inflating the potential reach of ads.