Facial recognition startup Clearview AI A settlement was reached Friday in a lawsuit in Illinois that alleged a massive collection of facial photographs violated the subjects’ privacy rights. Lawyers estimate the deal could be worth more than $50 million.
But the unique agreement gives plaintiffs in the federal lawsuit a share of the company’s potential value rather than a traditional payout. Attorney fees, estimated at $20 million, will also be included in the settlement.
Judge Sharon Johnson Coleman of the Northern District of Illinois gave preliminary approval to the agreement Friday.
The case consolidated lawsuits from across the U.S. filed against Clearview, which scraped photos from social media and other online sources to create a database that it sold to businesses, individuals and government agencies.
Company a separate case has been resolved claiming privacy rights in Illinois in 2022, agreeing to stop selling access to its database to private businesses or individuals. The agreement still allowed Clearview to work with federal agencies and local law enforcement outside of Illinois, which has strict digital privacy laws.
Clearview assumes no liability under the latest settlement agreement.
“Clearview AI is pleased to reach a settlement in this class action,” James Thompson, an attorney representing the company in the lawsuit, said in a written statement Friday.
The lead plaintiffs’ lawyer, John Lovie, said the agreement was a “creative decision” due to Clearview’s financial situation.
“Clearview did not have the money to compensate the class fairly, so we needed to find a creative solution,” Loewy said in a statement. “Under the agreement, victims whose privacy was violated now have the opportunity to share in any benefit that is ultimately generated, thereby returning some degree of ownership of their biometric data back to the class.”
It is unclear how many people will be eligible to join the settlement. The language of the agreement is broad, including anyone whose images or data is in the company’s database and who has resided in the United States since July 1, 2017.
Part of the agreement is a nationwide campaign to notify potential plaintiffs.
Clearview attorneys and the plaintiffs worked with Wayne Andersen, a retired federal judge who now mediates cases, to craft the agreement. In court filings presenting the settlement, Andersen explicitly writes that the startup could not pay any judgment if the lawsuit were to proceed.
“Clearview did not have the funds to pay the multi-million dollar judgment,” he is quoted as saying in the suit. “Indeed, there was great uncertainty as to whether Clearview would have enough money to see the litigation through to the end, let alone fund a judgment.”
But some privacy advocates and people bringing other lawsuits called the agreement a disappointment that will not change the company’s operations.
Sejal Zota is an attorney and the legal director of Just Futures Law, the organization representing plaintiffs in the California lawsuit against the company. Zota said the agreement “legitimizes” Clearview.
“It doesn’t address the root of the problem,” Zota said. “Clearview will continue its practice of collecting and selling people’s faces without their consent and using them to train its artificial intelligence technology.”