In 2018, Facebook was hit with a class action lawsuit alleging that the company improperly shared user data with third parties without consent. The lawsuit centered around the Cambridge Analytica data scandal, where millions of Facebook users’ data was harvested without permission and used for political advertising purposes.
In 2021, Facebook agreed to settle the class action lawsuit for $650 million. This is one of the largest data privacy settlements in history. But how much will individual Facebook users receive from the settlement? Here’s what to expect for the Facebook class action payout.
The $650 Million Settlement
The $650 million settlement resolves multiple class action lawsuits that were consolidated into one large case in a California federal court. The plaintiffs alleged that Facebook violated consumer protection laws and breached its duty to handle user data with proper care.
In addition to the $650 million payout, the settlement requires Facebook to deactivate dormant accounts, restrict third-party app access to data, and implement other safeguards to better protect user privacy.
Who is Eligible for the Payout?
The settlement class includes all Facebook users located in the United States who had an account at any time between January 1, 2010 and September 25, 2022.
To be eligible for a payout, class members must have had their data exposed in the Cambridge Analytica scandal. However, since it’s difficult to determine exactly whose data was misused, the settlement takes a broad approach to claim eligibility.
How Much Will Individuals Receive?
With millions of class members, don’t expect a big windfall payout. The settlement administrator estimates that individual payouts will likely be in the range of $5 to $50 per person.
The exact amount each person receives depends on how many class members file valid claims. If only one million people submit claims, the average payout would be around $50. But if all 147 million class members submit claims, the average would be just $5 per person.
How to File a Claim
To receive a payout, eligible Facebook users must submit a claim form online or by mail. The deadline to file a claim is September 22, 2023.
To file online, go to the official settlement website facebookdataprivacysettlement.com and submit a claim electronically. You’ll need to provide your name and current contact information.
To file by mail, download a claim form from the settlement website and mail it to:
Facebook Data Privacy SettlementP.O. Box 43401
Providence, RI 02940-3401
Make sure any mailed claims are postmarked by September 22, 2023.
When Will Payouts be Issued?
Payout distribution likely won’t occur until late 2023 or 2024. First, the court needs to give final approval to the settlement. Then, the claims administrator needs time to process all claims after the September 2023 deadline.
Once the claims review is complete, eligibility is verified, and any appeals are resolved, the settlement administrator can begin issuing checks and electronic payments. Claimants who provided an email address may receive payments faster via PayPal, Venmo, virtual visa cards, or other electronic means.
Unclaimed Funds
Any settlement funds not claimed by class members will be distributed to cy pres recipients focused on internet privacy and security. This includes donating to organizations like the Berkman Klein Center for Internet and Society at Harvard University and the Georgia Institute of Technology.
What if You Don’t Claim?
Keep in mind that the settlement is entirely voluntary. If you don’t submit a claim form, you won’t receive a payout but you also won’t give up any rights.
Class members who don’t claim settlement funds can still separately pursue legal action against Facebook over privacy violations if they choose. The settlement does not prevent you from filing your own lawsuit.
Tax Implications
The settlement administrator will send a 1099 tax form to anyone issued a payout of $600 or more. Amounts under $600 will generally not be reported to the IRS.
For tax purposes, the payout is considered non-wage compensation. It’s taxable as “other income” on your federal return. Consult a tax professional if you have questions about the tax treatment of settlement funds.
Settlement Benefits
While the cash payout may be small for most class members, the settlement provides other important benefits:
- Requires Facebook to strengthen user privacy protections
- Holds Facebook accountable through one of the largest privacy lawsuit settlements ever
- Provides a quick and easy way to receive some compensation through submitting a simple claim form
- Allows users to be part of enforcing change at tech companies mishandling personal data
Objecting to the Settlement
Most class members are expected to support the settlement. However, there is a process to object if you don’t like certain aspects of the settlement:
- Objections must be submitted to the California court by November 22, 2022
- The objection should clearly identify the case name and civil action number
- Include your full name, contact information, and the reasons for your objection
- File the objection through the court’s electronic filing system or mail it to the Class Action Clerk at the address provided in the settlement agreement
The court will consider all properly submitted objections. You may also attend the final approval hearing in January 2023 and present your objection to the judge at that time.
Conclusion
The Facebook class action settlement provides at least some compensation to millions of users whose data was compromised in the Cambridge Analytica scandal. Individual payout amounts are expected to be small – likely between $5 to $50 – but the settlement holds Facebook accountable and aims to enact meaningful privacy reforms.
Review the settlement agreement and file a claim form by September 2022 if you want to receive your portion of the $650 million fund. And consider the bigger picture by supporting efforts to strengthen data privacy laws and regulate how tech companies use our personal information.