January 30, 2020 / 7:19 PM / 23 days ago

UPDATE 1-Zuckerberg pledges Facebook users privacy upgrades after $550 million facial recognition settlement

(Adds settlement details and background throughout, Zuckerberg and analyst comments, Facebook results, second byline)

By Jonathan Stempel and Munsif Vengattil

Jan 30 (Reuters) - Facebook Inc has reached a $550 million settlement of claims it collected and stored millions of users' biometric data without their consent, as Chief Executive Mark Zuckerberg pledged better protections for users to address privacy concerns that have dogged the social media company.

The proposed class-action settlement was disclosed by Facebook's chief financial officer on a Wednesday 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.

The accord followed Facebook's $5 billion settlement last year with the U.S. Federal 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 committed Facebook to 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: " want everyone to be in control of their privacy on Facebook."

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

Facebook had 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 said Facebook did this by obtaining data through its "Tag Suggestions" feature, which allowed users to recognize Facebook friends from previously uploaded photos.

The settlement boosted Facebook's expenses for the fourth quarter, though profit still totaled $7.35 billion, up 7%.

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

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

More such litigation may be forthcoming.

"We expect Facebook to 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. (Reporting by Jonathan Stempel in New York and Munsif Vengattil in Bengaluru; Editing by Maju Samuel and Tom Brown)

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