Social Network Facebook has reached an agreement in a class-action lawsuit. According to the terms of the settlement, the company has 60 days from the preliminary approval date to turn its Beacon service off. Facebook has already announced plans to shut the feature down.
Facebook will also create a $9.5 million fund, from which litigant fees, attorney costs and named plaintiffs, as well as members of the plaintiff class, will be paid.
Additionally, the company has 20 days to create a non-profit privacy foundation, “the purpose of which shall be to fund projects and initiatives that promote the cause of online privacy, safety and security.” Out of pocket expenses will be deducted from the settlement up to a $50,000 cap.
The complaints against Beacon stemmed from an allegedly insufficient opt-out mechanism.
In signing the settlement, neither Facebook nor any of the merchant partners named in the suit admitted any wrongdoing.
The suit stemmed from Facebook’s Beacon feature, which launched in November 2007. Beacon disclosed online purchases Facebook members made through a merchant network to individuals within the purchasers friends’ groups.
The class-action suit alleged the company did this in violation of the Electronic Communications Privacy Act; the Computer Fraud and Abuse Act; the Video Privacy Protection Act; and several California statutes.
One defendant, Massachusetts resident Sean Lane, claimed that Beacon’s posting of a diamond ring he had purchased from Overstock.com – along with the 51% discount he received – had ruined his Christmas holiday.
