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US appeals court tells Facebook to pay up

by on21 September 2012

Beacon service violated privacy

A U.S. appeals court refused to disturb Facebook Inc's $9.5 million class action settlement over allegations that the social networking company's defunct "Beacon" service.

The 2-1 ruling on Thursday came from the 9th US Circuit Court of Appeals, with the one dissenting judge saying the settlement unfairly benefited Facebook and plaintiff attorneys. Beacon was launched in 2007 and it allowed users to broadcast their Internet activity to friends.

Facebook didn't require anyone's affirmative consent to participate in the programme, and users soon complained about their private information being transmitted without permission. Facebook pulled the service but 19 plaintiffs filed a proposed class action in federal court against Facebook and other businesses who participated in Beacon. Facebook soon agreed to settle the case for $9.5 million.

About $3 million of that was set aside for attorney's fees, with the rest going to establish a charitable group focused on online privacy rights. However some of the plaintiffs objected to the settlement thinking it was too low, but in its ruling the 9th Circuit said $9.5 million was about right.

Facebook deputy general counsel Colin Stretch said the company was pleased the 9th Circuit found the settlement fair.

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