A US judge on Monday gave his preliminary approval to a second attempt by Facebook Inc to settle a class action lawsuit which charges the social networking company with violating privacy rights.
US District Judge Richard Seeborg in California rejected a settlement in August over Facebook's 'Sponsored Stories' advertising feature, questioning why it did not award money to Facebook members for using their personal information.
But in a ruling handed down Monday, Seeborg said a revised settlement "falls within the range of possible approval as fair, reasonable and adequate."
In a revised proposal, Facebook and plaintiff lawyers said users now could claim a cash payment of up to $10 each to be paid from a $20 million total settlement fund. Any money remaining would then go to charity.
The company also said it would engineer a new tool to enable users to view content that might have been displayed in Sponsored Stories and opt out if they desire, a court document said.
If it receives final approval, the proposed settlement would resolve a 2011 lawsuit originally filed by five Facebook Inc members.
The lawsuit alleged the Sponsored Stories feature violated California law by publicizing users' "likes" of certain advertisers without paying them or giving them a way to opt out. The case involved over 100 million potential class members.
A spokesman for Facebook said the company was "pleased that the court has granted preliminary approval of the proposed settlement." Lawyers for the plaintiffs weren't immediately available for comment Monday evening.
Outside groups and class members will have a chance to object to the latest settlement before Seeborg decides whether to grant final approval. A hearing on the fairness of the deal has been set for June 28, 2013. The case in US District Court, Northern District of California is Angel Fraley et al., individually and on behalf of all others similarly situated vs. Facebook Inc, 11-cv-1726.
Facebook also said it had "clarified" some of the proposed changes, specifying that a new policy allowing it to share user data with recently acquired photo-application Instagram will be carried out in compliance with applicable laws and that Facebook will seek user consent when necessary.
The proposed changes, which Facebook announced on November 21, generated roughly 89,000 user comments as well as concerns from some privacy-advocacy groups and a request for more information from the Data Protection Commission in Ireland, where Facebook's European business has its headquarters.
"Based on your feedback and after consultation with our regulators, including the Irish Data Protection Commissioner's Office, we've further clarified some of our proposals," said Elliot Schrage, Facebook Vice President of Communications, Public Policy and Marketing in a post on Facebook's company blog on Monday.
Facebook is proposing to eliminate the 4-year-old system that allows users to vote on changes to its governance policies. The company says the voting system hasn't functioned as intended and is no longer suited to its current situation as a large publicly traded company subject to oversight by various regulatory agencies.
Facebook said on Monday that it would incorporate user suggestions for creating new tools to "enhance communication" on privacy and governance matters.
Another proposal would loosen the restrictions on how members of the social network can contact other members using the Facebook email system. The company said it planned to replace the "Who can send you Facebook messages" setting with new filters for managing incoming messages.
Facebook's potential information sharing with Instagram, a photo-sharing service for smartphone users that it bought in October, flows from proposed changes that would allow the company to share information between its own service and other businesses or affiliates it owns.
The change could open the door for Facebook to build unified profiles of its users that include people's personal data from its social network and from Instagram, similar to recent moves by Google Inc.
Facebook said on Monday that the proposed change was "standard in the industry" and "promotes the efficient and effective use of the services Facebook and its affiliates," such as allowing users in the US to interact with users in Europe.
"This provision covers Instagram and allows us to store Instagram's server logs and administrative records in a way that is more efficient than maintaining totally separate storage systems," the company wrote in a separate post on its website Monday titled "explanation of changes".
"Where additional consent of our users is required, we will obtain it," Facebook said.
Facebook users have until December 10 to vote on the policies using a special third-party application provided by Facebook and Facebook said the results will be certified by an independent auditor.
The vote is only binding if at least 30 per cent of users take part, and two prior votes never reached that threshold.