Facebook pays $10 million to settle ad suit

Facebook will pay $10 million to settle a lawsuit from users who claimed their names, images and other information were improperly used in advertising described as "sponsored stories," court documents showed.

According to documents dated earlier this month and available online, Facebook and a series of plaintiffs submitted an agreement to a federal judge in San Jose, California.

The lawsuit was filed in 2011 by a group led by a Washington state Internet user named Angel Fraley. The suit alleged that Facebook users, including minors, had their names and likenesses used in ads without their permission.

The suit contended Facebook improperly used advertising when a member indicated he or she "liked" a particular company.

The "like" was passed on to the friends of those members as an implied endorsement of a company or product. In some cases, the profile or picture was used in the "sponsored stories" that the suit said was a form of advertising.

A mediator assigned to the case said the agreement included the "substantial sum" of $10 million "to be distributed to groups whose charters set out actions and programs relevant to advocacy related to the purposes for which the case was brought."

A settlement in the case was unveiled earlier this month but terms were not disclosed.

The company, which launched a massive public offering last month, is under growing scrutiny for its privacy policies. It is also under pressure from investors to find ways to monetize its social network with more than 900 million members.