Facebook Class Action Lawsuit Prompts $9.5M Privacy Fund

The torrent of bad press over Facebook's privacy policies has led to the demise of its much-disliked advertising program called "Beacon." The program, which was considered a marketing coup when first unveiled two years ago, has been phased out in accordance with the settlement of a year-old class action lawsuit.

At the heart of the lawsuit was the contention that Facebook had failed to properly inform its many users of the privacy compromises introduced by Beacon, which used the data collected from member pages to help third-party sites tailor more effective advertising schemes.

Suit Ends with $9.5 Million Privacy Fund

The settlement still needs approval from a judge, but if it goes through, it'll also include a $9.5 million fund for the creation of independent online organizations built exclusively for the protection of Internet user privacy. (Source: bizjournals.com)

About one-third of the $9.5 million could be claimed by the class action suit's plaintiffs, however.

Officially, Facebook has welcomed the settlement and the establishment of the privacy fund. "We look forward to the creation of the foundation and its work to educate Internet users on how best to control their privacy, engage in safe social-networking practices, and, generally, enjoy themselves more online by having knowledge that gives them a greater sense of control," the company said in a recent statement. (Source: cnet.com)

Beacon Eclipsed by 'Facebook Connect'

Unofficially, the end of Beacon appears to mark a troubling turn of events for Facebook, which (until recently) has struggled to turn a profit since it swept across the world four years ago. However, replacing Beacon is the surprisingly popular Facebook Connect, which is much more up-front with its privacy policy and user authentication while at the same time offering companies marketing opportunities.