Judge Rejects Facebook ‘Sponsored Stories’ Settlement

US District Judge Richard Seeborg has rejected a proposed settlement in Facebook’s violation of member rights and California law. The company was sued for improperly obtaining and using user information as part of its sponsored stories advertisements.

Judge Seeborg rejected the lawsuit because the company didn’t provide a better answer to previous questions about why no cash was awarded to class members.

In a statement regarding the rejection Facebook said:

“We continue to believe the settlement is fair, reasonable, and adequate. We appreciate the court’s guidance and look forward to addressing the questions raised in the order.”

The lawsuit included $20 million for lawyers and charities. Lawyers claim that the true value of the lawsuit thanks to Facebook privacy changes is closer to $123 million.

If you are unfamiliar with Facebook Sponsored Stories they were advertisements that would appear on a friends page when someone liked an advertiser. For example if your friend liked the page for Nike you might see a Nike ad with your friends photo and name next to a Nike ad via your personal Facebook page.

Following the settlement Facebook was forced to review its terms of service, allowing users to choose what if any personal information can be used in Sponsored Stories while also choosing to opt-out completely.

$10 million from the settlement will be paid to 15 different charities that advocate privacy.

The two sides were not able to come up with a suitable algorithm to determine the settlement value and ultimately settled on a number both side believed was fair.