Facebook settles user suit over sponsored posts

Facebook has reportedly settled a class action lawsuit involving its sponsored stories feature.

Reuters cited court documents in reporting that the social networking giant has settled a case brought by five of its users over the use of the company's 'sponsored stories' feature.

The suit dealt with Facebook publicising users "likes" without compensation or opt out options in its sponsored stories ads. Facebook's sponsored stories system turned users "likes" into paid advertisements that included the user's name and profile picture.

Facebook had hoped to get the case dismissed before going to trial. US Judge Lucy Koh declined to dismiss parts of the case late last year. The social networking site decided to settle before a hearing scheduled for this Thursday.

The settlement has yet to be finalised but both the plaintiffs and Facebook have reportedly agreed in principle to an undisclosed amount.

The exact amount offered in the settlement has yet to be disclosed.

Facebook has dominated headlines in the wake of its IPO. Shares in the company dropped 10 per cent following initially promising projections.

The company was also recent hit with a different lawsuit involving Facebook's use of cookies to track users even after they were logged out of the site.

Facebook declined to comment on the matter.