Facebook reaches $550 million settlement in facial recognition lawsuit

The proposed class-action settlement was disclosed byFacebook's chief financial officer on a Wednesday conference call to discuss fourth-quarter results, and by lawyers forFacebookusers who called it the largest cash settlement of a privacy lawsuit.

Facebookdid not admit wrongdoing in agreeing to the settlement, which requires court approval.

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The accord followedFacebook's $5 billion settlement last year with the USFederal Trade Commission, which arose from the company's having allowed British consulting firm Cambridge Analytica to harvest data for an estimated 87 million users.

Zuckerberg said during the call that the FTC settlement committedFacebookto privacy controls that "set a new standard for our industry, going beyond anything that's required by law today."

Chief Operating Officer Sheryl Sandberg added: "Wewant everyone to be in control of their privacy onFacebook."

The $550 million payout surpasses the $380.5 million that Equifax Incorporation agreed to pay last year to resolve consumer claims over a 2017 data breach that compromised the personal information of 143 million Americans.

Facebookhad originally been sued in 2015, when users accused the Menlo Park, California-based company of violating Illinois' Biometric Information Privacy Act by using facial recognition technology to collect biometric data.

Users saidFacebookdid this by obtaining data through its "Tag Suggestions" feature, which allowed users to recogniseFacebookfriends from previously uploaded photos.

The settlement boostedFacebook's expenses for the fourth quarter, though profit still totalled $7.35 billion, up 7 per cent.

It followed a federal appeals court's refusal last August to undo the class action afterFacebookhad argued the Illinois users had unique claims requiring individual lawsuits.

The plaintiffs were represented by the Edelson, Labaton Sucharow, and Robbins Geller Rudman andDowd law firms.

More such litigation may be forthcoming.

"We expectFacebookto face similar legal battles at the state and federal levels," Morningstar analyst Ali Mogharabi wrote after results were released.

Illinois' biometric privacy law provided for damages of $1,000 for each negligent violation and $5,000 for each intentional or reckless violation.