Facebook (NASDAQ: FB) has agreed to pay a $550 million settlement in principle related to a class-action lawsuit that claimed it illegally collected and stored biometric data for its facial recognition technology.
The lawsuit began in 2015 when Illinois users accused Facebook of violating the state's Biometric Privacy Act in collecting biometric data. Under Illinois law, companies must obtain explicit permission before collecting a wide array of biometric data, including scans of one's face. Plaintiffs alleged that Facebook ran afoul of those rules as part of a feature meant to spot, identify and recommend tags of users in photos that had been uploaded to the social networking site.
The proposed class-action settlement was disclosed by Facebook's chief financial officer during a conference call to discuss fourth-quarter results, and by lawyers for Facebook users who called it the largest cash settlement of a privacy lawsuit. Facebook did not admit wrongdoing in agreeing to the settlement, which requires court approval.
Facebook tried to take the matter to the U.S. Supreme Court, but the justices rejected the case last week. Their decision essentially would have allowed the lawsuit to proceed on the merits before the tech giant announced it had been settled in principle as part of its fourth-quarter 2019 earnings, during which it reported roughly $21 billion in revenue.
Jay Edelson, a lawyer whose firm represented plaintiffs in the class-action lawsuit, said that "biometric privacy is one of the biggest fights of the day."
"We are proud of this settlement and hope that others will follow Facebook's lead," he added.
Facebook did not provide further details.
"We decided to pursue settlement as it was in the best interest of our community and our shareholders to move past this matter," spokesman Andy Stone said in a statement.
Illinois' biometric privacy law provided for damages of $1,000 for each negligent violation and $5,000 for each intentional or reckless violation.