Federal Court Forces Facebook to Increase Its Largest-Ever Cash Privacy Settlement by $100 Million

Earlier this year, Facebook reached a tentative $550 million settlement in a federal class-action litigation alleging a wrongful use of its facial- recognition technology on residents of Illinois. The settlement was lauded as the largest-ever cash privacy settlement won by class-action attorneys.

The lawsuit was brought under the Illinois Biometric Information Privacy Act (BIPA), which requires private entities to provide notice and obtain written consent before biometric information is collected, prohibits the sale of and restricts the overall disclosure of biometric information, and requires companies to follow a reasonable standard of care in storing, transmitting, and protecting biometric information from disclosure.  Plaintiffs alleged that they did not consent to having their uploaded pictures scanned with facial recognition software for purpose of “tag suggestions” and were not informed of how long the data would be saved when the mapping started in 2011.

In early June, the federal judge presiding over the case declined to approve the proposed deal and took an issue with the fact that under the settlement, the most a class member would recover is $300, but more likely $150, even though BIPA provides for a $1,000-per-violation fine, even when the violation is not intentional.

At a hearing held on July 23, 2020, Facebook agreed to increase the settlement amount to $650 million. Although the Judge has not yet approved it, he characterized the revised proposal as being “incrementally better.”  Under the new deal, class members would be paid between $200 and $400 reach.  The Judge also indicated that he wanted Facebook to engage in a robust outreach to its customers to ensure that they step forward to make settlement claims.

According to legal experts,  the federal court’s stance in the Facebook case “will almost certainly lead to other courts applying significantly increased scrutiny to data-privacy settlements or settlements for claims with statutory damages.”  Indeed, companies ignoring their obligations under privacy laws are doing so at their own peril. With courts seeking to protect consumer privacy rights, even a record-setting settlement might not be enough for the defendant company to walk away from the privacy litigation.

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