Facebook Loses Important Court Case On Class Action Lawsuit

Facebook Inc. (NASDAQ:FB) lost a legal appeal and must now deal with a class-action lawsuit that claims the company illegally collected and stored biometric data for millions of users without their consent.

A United States federal appeals court on Thursday rejected the company’s efforts to undo the class-action lawsuit that has been brought by Facebook users in the state of Illinois. The 3-0 decision from the 9th U.S. Circuit Court of Appeals in San Francisco exposes Facebook to potentially billions of dollars in damages.

It came as the social media company faces broad criticism from lawmakers and regulators over its privacy practices. Last month, Facebook agreed to pay a record $5 billion U.S. fine to settle a Federal Trade Commission data privacy case.

The lawsuit began in 2015, when Illinois users accused Facebook of violating that state's Biometric Information Privacy Act by using facial recognition technology to collect biometric data. Facebook allegedly accomplished this through its "Tag Suggestions" feature, which allowed users to recognize their Facebook friends from previously uploaded photos.

Writing for the appeals court, Circuit Judge Sandra Ikuta said the Illinois users could sue as a group, rejecting Facebook's argument their claims were unique and required individual lawsuits. The Illinois law provides for damages of $1,000 for each negligent violation and $5,000 for each intentional or reckless violation. The court on Thursday said that the class action lawsuit could include seven million Facebook users.