Meta Hit with Largest-Ever State Privacy Fine – Texas AG Secures $1.4B Settlement

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

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