Facebook Faces Sponsored Stories Lawsuit for $10M

About a month ago, Facebook settled a lawsuit for “Sponsored Stories” and was forced to pay $10 million. This just became public from federal court in San Jose, California.

What is a Facebook Sponsored Story?

Sponsored Stores are advertisements including a friend’s name, profile picture, and text saying that they like a certain product, service, or person that is being advertised. These “stories” are valued at 3 times the amount of a regular advertisement and act as a recommendation. However, that friend’s “like” is made public without their awareness and they are not being compensated for their referral.

Five Facebook members filed against the social network for this as it is in violation of California law. This could have included a substantially larger number had the word gotten out and Facebook would be facing billions in penalties.

U.S. District Judge Lucy Koh found the Sponsored Stories to cause “economic injury” be involving people’s names, pictures, and interests. Therefore, a cy-pres settlement was issued, meaning Facebook’s $10 million will be sent to charity.

“California has long recognized a right to protect one’s name and likeness against appropriation by others for their advantage,” Koh wrote.

Yet another privacy lawsuit for Facebook has reached their door. Not only in court, but outside Facebook has been spending large amounts on various causes. From their expansion of their headquarters and $1 billion Instagram purchase, to possible future purchases – Facebook is showing just how financially powerful it is.

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