Facebook Agrees to Pay $40M to Advertisers over ad engagement lawsuit

Facebook has agreed to pay $40 million to advertisers who said it inflated the amount of time its users watched videos.

Advertisers sued Facebook in 2016 over user metrics that supposedly measured the average length of time consumers spent viewing posted video ads. The lawsuit said that the time was inflated by up to 900 percent and that helped convince advertisers to buy Facebook’s video advertising services.

Facebook publicly acknowledged an error in the formula. The company denied allegations that its engineers knew about problems for more than a year and did nothing.

According to a briefing document from the three-year litigation, Facebook is alleged to have given faulty ‘watch time’ statistics to potential advertisers in 2015 and 2016. During an 18 month stint, Facebook reportedly miscalculated two key metrics, leading to advertisers being given inflated numbers.

According to Forbes, a spokesperson for the social media company labelled the suit as “without merit” but added, “we believe resolving this case is in the best interests of the company and advertisers.”

The settlement still needs to be accepted by the plaintiffs, but if they agree to Facebook’s offer, it could see up to 1.35 million advertisers receive a pay-out.