Facebook to pay $5 billion penalty for user privacy violations

The Federal Trade Commission on Wednesday announced that the Menlo Park-based social media giant Facebook Inc. will pay a record-breaking $5 billion penalty for violating users’ privacy.

The penalty is part of a settlement Facebook made to settle charges that the company violated a 2012 FTC order “by deceiving users about their ability to control the privacy of their personal information,” FTC officials wrote in a news release.

Facebook was accused of using deceptive disclosures and settings that allowed the company to share users’ personal information with third-party apps.

It is the largest-ever penalty imposed on a company for consumer privacy violations and is one of the largest ever assessed by the federal government.

The settlement also requires Facebook to restructure its approach to privacy and strengthens oversight by an independent assessor.

FTC chairman Joe Simons said:

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices.”

Simons said:

“The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations.”

The company issued a statement Wednesday in the wake of the settlement announcement.

Facebook’s statement said:

“The agreement will require a fundamental shift in the way we approach our work and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past.”

Facebook said:

“The accountability required by this agreement surpasses current U.S. law and we hope will be a model for the industry. It introduces more stringent processes to identify privacy risks, more documentation of those risks, and more sweeping measures to ensure that we meet these new requirements.”