Meta Agrees to $1.4 Billion Settlement in Texas Biometric Lawsuit

Meta to pay $1.4B for Texas biometric lawsuit settlement (NASDAQ:META)

Meta Platforms (NASDAQ:META) agreed to a $1.4B settlement for a lawsuit filed by the state of Texas over allegations of capturing biometric data through its facial recognition technology. The 2022 lawsuit accuses Meta (META) of misusing users' data on Facebook for the purposes of photo face-tagging, particularly through a feature called "tag". Money will be paid over five years and is the largest settlement obtained by a single state, Texas Attorney General Ken Paxton said. "This historic settlement demonstrates our commitment to standing up to the world's biggest technology companies and holding them accountable for breaking the law and violating Texans' privacy rights," Paxton said in a statement. In May, the parties told the Texas Supreme Court that they had reached a settlement. The resolution comes days before the August 6 deadline to provide an update. Previously, in 2021, the social network company (META) agreed to pay $650M over similar allegations of users in Illinois. Alphabet's (GOOG) (GOOGL) Google is also fighting a similar lawsuit by Texas accusing it of violating the state's biometric law. More on Meta Platforms Wall Street Lunch: Meta Brings AI Studio Meta Q2 Earnings Preview: Best AI Stock Meta Platforms Q2 Earnings: An AI Dud Could Send Shares Crashing (Rating Downgrade) Meta Platforms' ad sales, AI investment in focus during Q2 earnings

Meta will pay $1.4 billion to settle facial-recognition tech case

Meta has reached a settlement to pay the state of Texas $1.4 billion over the use of its facial recognition-technology, which the state said violated its privacy protections. The tech giant will have to pay the settlement, "the largest ever obtained from an action brought by a single State," over a five year period, Texas Attorney General Ken Paxton said. A Meta spokesperson said in a statement shared with Quartz that the company is "pleased to resolve this matter, and look[s] forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centers." Meta did not admit to any wrongdoing in the settlement. The Texas attorney general's office filed a lawsuit against Facebook, now Meta, over the technology in February 2022, alleging that the facial-recognition technology had captured and used biometric data of millions of Texans without their consent, therefore violating the state's privacy protections. Facebook, the attorney general's office alleged, was storing biometric identifiers, defined as "a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry" from photos and videos uploaded to the platform. "Facebook will no longer take advantage of people and their children with the intent to turn a profit at the expense of one's safety and well-being," Paxton said at the time. "This is yet another example of Big Tech's deceitful business practices and it must stop. I will continue to fight for Texans' privacy and security." Meta shut down its facial-recognition software in November 2021 after using it for a decade. The company said it would delete the entirety of the data, which was used to identify people in photos, for one billion of its users over concerns it was being misused by governments and other entities. "There are many concerns about the place of facial recognition technology in society, and regulators are still in the process of providing a clear set of rules governing its use," Jerome Pesenti, former vice president of artificial intelligence at Meta, said in a statement at the time. In 2019, Facebook reached a $5 billion privacy settlement with the U.S. Federal Trade Commission over the use of facial-recognition technology. And in 2021, the company paid the state of Illinois $650 million for violating a biometric privacy law.

Meta Hit with Largest-Ever State Privacy Fine - Texas AG Secures $1.4B Settlement - Meta Platforms (NASDAQ:META)

Texas AG Paxton hails this as the largest state settlement, following a 2022 lawsuit on facial recognition violations. Facebook parent Meta Platforms, Inc. META shares are trading lower today. The company has agreed to pay a penalty of $1.4 billion to Texas to settle claims of improperly collecting millions of citizens' biometric data without consent. The company will pay the settlement over five years. Texas Attorney General Ken Paxton said, "After vigorously pursuing justice for our citizens whose privacy rights were violated by Meta's use of facial recognition software, I'm proud to announce that we have reached the largest settlement ever obtained from an action brought by a single State." In February 2022, Attorney General Paxton filed this lawsuit in state district court in Marshall. The lawsuit also alleged that Facebook has obtained patents for systems "where consumers wandering in stores or standing at checkout counters have their faces scanned and matched with their social-networking profiles." The complaint alleged that Facebook violated Texas state law not just hundreds or thousands, but billions of times, with civil penalties of at least $10,000 sought for each violation. Related: Meta CEO Mark Zuckerberg Summoned To Court In Texas Over Alleged Misuse Of Facial Recognition Notably, Meta introduced a feature called Tag Suggestions in 2011 to enhance user experience by automating photo tagging and enabled this feature for all Texans without clearly explaining its functionality. This settlement is the largest ever by a single state and surpasses the $390 million settlement from Alphabet Inc. GOOG GOOGL Google secured by 40 states in 2022. It is also the biggest privacy settlement achieved by an Attorney General and sets a precedent under Texas' biometric privacy law. Moreover, this is also one of the largest penalties Meta has faced from regulators, only second to the $5 billion settlement with the U.S. Federal Trade Commission in 2019 over user data misuse related to the Cambridge Analytica scandal, as per Financial Times. Meta stock has gained over 44% in the last 12 months. Investors can gain exposure to the stock via Vanguard Communication Services ETF VOX and Communication Services Select Sector SPDR Fund XLC. Price Action: META shares are down 0.56% at $463.09 at the last check Tuesday. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo via Shutterstock Read Next: Meta Platforms Q2 Earnings Preview: AI In Focus As 'Advertisers Spend On The Best Digital Channels -- Including Meta,' Analyst Says Market News and Data brought to you by Benzinga APIs

Meta Settles Landmark $1.4 Billion Biometrics Suit With Texas

Meta will pay a record $1.4 billion to settle a biometrics-related lawsuit in Texas. In a Tuesday (July 30) news release, Texas Attorney General Ken Paxton said the settlement was the largest ever from an action brought by a single state, and is the largest privacy settlement obtained by an attorney general. According to the release, the settlement will stop Meta's practice of "capturing and using the personal biometric data of millions of Texans without the authorization required by law." Paxton sued Meta in 2022, accusing the company of capturing millions of Texans' biometric data without their consent. "In 2011, Meta rolled out a new feature, initially called Tag Suggestions, that it claimed would improve the user experience by making it easier for users to 'tag' photographs with the names of people in the photo," the release said. "Meta automatically turned this feature on for all Texans without explaining how the feature worked." The release adds that Meta -- unbeknownst to most people in Texas -- spent more than a decade using facial recognition software on essentially every face contained in the photographs uploaded to Facebook, despite knowing that state law forbids this practice unless a business gets a person's consent. PYMNTS has contacted Meta for comment but has not received a reply. A report on the settlement Tuesday by CNBC included this statement from the company: "We are pleased to resolve this matter, and look forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centers." The settlement comes at a time of heightened privacy concerns surrounding facial recognition, as PYMNTS wrote in May. At the time, Microsoft had just updated its code of conduct to prevent its artificial intelligence (AI) service from being used for facial recognition purposes by or for U.S. law enforcement. "Microsoft is banning it because, as a whole, there is still some hesitancy and trepidation regarding the use of facial recognition by police," Bob Eckel, CEO of biometric solutions provider Aware, told PYMNTS. "Some argue that facial recognition fosters discrimination by being less accurate for certain races, nationalities and ethnicities. However, this is not true." Underlining the advancements in facial recognition accuracy, Eckel added, "Today's facial recognition tools are tested and validated by trustworthy third parties, and certain states require police agencies using facial recognition to only use software deemed to be at least 98 percent accurate across all demographics."