Millions of Facebook users to get share of the platform’s $725M privacy settlement — here’s what to expect

Did you file a claim in Facebook’s $725-million privacy settlement? If you did, your payout may finally be on the way.

According to CBS News, payments started going out in September and will continue over a 10-week period [1].

Millions of users were eligible to file claims back in 2023, after lawsuits accused Facebook of mishandling personal data and sharing it with advertisers and data brokers.

The case goes back to the 2018 Cambridge Analytica scandal, when the political consulting firm harvested user information to build voter profiles. Meta, Facebook’s parent company, has denied any wrongdoing.

Here’s what to know about how much of a payment to expect, and if there are tax implications.

According to a Sept. 5 court filing, the average payout is $29.43, and the maximum is capped at $38.36. The size of each payment depends on how long you used Facebook between May 24, 2007 and Dec. 22, 2022.

People were given an “allocation point” for every month they were active on Facebook. That means people who stuck with Facebook the longest will collect the largest checks, up to the maximum amount.

So how do you know if you’re getting paid?

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If you’re getting a payout, you’ll get an email from “Facebook User Privacy Settlement Administrator” with a subject line reading: Facebook User Privacy Settlement – Settlement and Distribution Status Update. The email should include your claim ID.

But hold on, don’t spend it all at once.

According to the IRS, nearly all income is taxable under Internal Revenue Code Section 61, except for when there is a specific exclusion.

One major exclusion comes from Section 104, which allows amounts received for personal physical injuries or physical sickness to be excluded from gross income.

The CBS reporting on the Facebook payout does not describe that the settlement was for physical harm or illness; instead, the settlement claims involve privacy violations and the sharing of user information with third parties.

This means the payments are likely to be considered non-physical injury damages, so the amounts are probably taxable as ordinary income.

Since the amounts are modest, but still extra money, don’t forget to consider these practical steps:

• Read the settlement paperwork you received carefully.

• Check with a tax expert, like your accountant and check the IRS website.

• If the amount is taxable, set some aside for possible tax liability so you’re not surprised at filing time.

• The Financial Regulatory Authority (FINRA) recommends putting together a plan for any kind of financial windfall, even a small one [2].

• If you have high‐interest debt, you can put the money towards this instead of letting it sit.

• Consider putting the money towards your emergency fund.

If you’re getting a payout from Facebook, don’t assume it’s tax-free; make sure to check with a tax professional as your best bet.

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[1]. CBS News “Payments for Facebook’s $725 million privacy settlement are starting. Here’s what to know”

[2]. FINRA “Tips for managing a financial windfall”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.