Facebook Settles Online Privacy Lawsuit

The popular social networking website Facebook has agreed to cease use of its marketing program after being sued by account holders who felt their privacy was threatened.

The lawsuit, filed in 2008 on behalf of 19 Facebook users, alleged that the Beacon marketing tool released their personal information on the website without consent, for advertising purposes. Beacon collected information from frequently used websites and posted status updates on Facebook listing items account holders had bought on Overstock.com, or movie tickets they had purchased on Fandango's website.

As part of a $9.5 million settlement, Facebook agreed to shut down Beacon and create a foundation promoting online privacy and security. The settlement awaits approval from a San Jose federal judge.

The comapany's spokesman Barry Schnitt commented, "We learned a great deal from the Beacon experience. For one, it was underscored how critical it is to provide extensive user control over how information is shared. We also learned how to effectively communicate changes that we make to the user experience."

Facebook's new marketing program, Nielsen BradLift, will be unveiled this week, the Associated Press reports.

The website has calculated that there are more than 300 million users on Facebook, with about 50 percent logging on each day.