Facebook has successfully settled a 2011 privacy suit, according to a Reuters report, paying $20 million to a class action group who claim the Sponsored Stories program violated their privacy. The terms of the settlement also require Facebook to change the program so as to give users more control over how their content is shared, which the plaintiffs estimate could cost Facebook as much as $145 million.
The central issue is Facebook's practice of using a user's likeness as an advertising tool, displaying the users' profile image and name alongside a branding page they had "Liked." A California Civil Code makes likeness advertising illegal without explicit consent and, as the settlement makes clear, simply checking Facebook's Terms of Service isn't enough. It remains to be seen how Facebook will restructure the program to comply with the settlement, but some version will almost certainly survive. In the 19 months since the initial claims, Sponsored Stories netted Facebook nearly $234 million.