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March 3, 2010, 02:56 PM ET

Award to Foundation in Settlement of Facebook Lawsuit Questioned

A consumer-advocacy group is protesting the proposed settlement of a class-action suit against Facebook that would award several million dollars to a new charity set up in part by the plaintiff, reports The Wall Street Journal.

A suit filed in 2008 accuses the social-networking giant of improperly sharing information about users' online activities, including product purchases. Under the proposed $9.5-million settlement, which follows a growing trend of directing class-action awards to charity, more than two-thirds of the money would go to a privacy-rights foundation established, in part, by Facebook.

"In essence, Facebook is paying itself money to gain a broad release of its users' legal claims," the nonprofit consumer group Public Citizen argued in an objection to the settlement, which it filed in federal court in San Francisco.

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