Facebook sued by Washington, D.C., over data breach accusationsBy Lisa Lambert and Paresh Dave
WASHINGTON (Reuters) - The attorney general for Washington, D.C., said on Wednesday the U.S. capital city had sued Facebook Inc (NASDAQ:FB) for allegedly misleading users about how it safeguarded their personal data, in the latest fallout from the Cambridge Analytica scandal.
Washington, D.C., Attorney General Karl Racine said Facebook misled users because it had known about the incident for two years before disclosing it. The company had told users it vetted third-party apps, yet made few checks, Racine said.
Facebook shares suffered their biggest drop since July 26, closing down more than 7 percent at $133.24 on Wednesday, extending a roughly five-month stretch since the company warned that profit margins would erode in coming years because of consumer and government pressure to better guard data and suppress objectionable content.
The court could award unspecified damages and impose a civil penalty of up to $5,000 per violation of the district's consumer protection law, or potentially close to $1.7 billion, if penalized for each consumer affected as is typical. The lawsuit alleges the quiz software had data on 340,000 D.C. residents, though just 852 users had directly engaged with it.
It further alleges Facebook misled users by allowing several partners, including mobile software maker BlackBerry, "to override Facebook consumers’ privacy settings and access their information without their knowledge or consent."
At least six U.S. states have ongoing investigations into Facebook, according to state officials.
At the same time, the Federal Trade Commission took the unusual step of announcing an investigation into whether Facebook had violated a 2011 consent decree, exposing the company to a multi-billion dollar fine.
Agnieszka McPeak, a professor at Duquesne University School of Law, said states will likely make claims similar to those of D.C., pressuring Facebook into a settlement that involves both a monetary fine and modified business practices.
“If a company faces 51 separate actions around the country for deceptive practices, that can have a real impact,” McPeak said.
Source: Reuters
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