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Feb. 9, 2020, 5:00 p.m. EST

Here’s why Facebook agreed to pay $550 million privacy settlement to Illinois

Social-network giant ran afoul of state’s strict biometric privacy law

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By Associated Press

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Illinois is one of three states that have laws governing the use of biometric data. But the other two, Texas and Washington, don’t permit individual lawsuits, instead delegating enforcement to their attorneys general.

The state’s Chamber of Commerce and tech industry groups have backed amendments to gut Illinois’ allowance of individual lawsuits or exempt time-keeping systems.

Illinois’ law puts “litigation over innovation,” said Tyler Diers, the Illinois and Midwest executive director of the industry group TechNet, whose members include Apple /zigman2/quotes/202934861/composite AAPL +2.85%  , Facebook and Google.

“This case exemplifies why consumer privacy law should empower state regulators to enforce rather than line the pockets of class action attorneys,” Diers said in a statement.

Facing Illinois’ law, some companies opt out of the state. Sony /zigman2/quotes/208567357/composite SNE +1.71%  , for instance, refuses to sell its “aibo” robot dog to Illinois residents and says the device’s ability to behave differently toward individual people depends on facial recognition technology.

Backers of the law argue that it’s not difficult to comply — simply tell consumers you plan to use biometric data and get their consent.

State Rep. Ann Williams, a Chicago Democrat, said the ability to sue is critical for consumers facing global companies that make billions of dollars per year.

“If the penalty’s only a fine, that’s the cost of doing business for them,” Williams said. “A settlement like (the Facebook case), we’re talking about real money that will go to consumers.”

Attorneys who defend smaller companies, though, argue that the law should be narrowed to permit the use of fingerprint scanners to track employees’ hours.

“Small and medium-size businesses really do not have the resources to defend these cases or pay some big settlement,” said Mary Smigielski, a partner at Lewis Brisbois Bisgaard & Smith and a co-leader of the firm’s group focused on Illinois’ biometric law.

The Facebook case wound through courtrooms in Illinois and California for nearly five years before last month’s announcement of a settlement, days after the U.S. Supreme Court declined to hear arguments.

Edelson said he hopes that the $550 million deal, which lawyers on the case described as a record amount for a privacy claim, will put pressure on attorneys to refuse credit monitoring or negligible cash payouts that are more typical in agreements to resolve data privacy suits.

People eligible for the settlement will be contacted directly and don’t need to take any action until then, attorneys on the case said.

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