Clearview AI uses your face. Now you can participate in the company.

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A facial recognition startup accused of invasion of privacy in a class-action lawsuit has agreed to a settlement with a twist: Instead of a cash payment, it will give a 23 percent stake in the company to Americans who His database of faces.

Clearview AI, based in New York, scraped billions of images from the web and social media sites like Facebook, LinkedIn and Instagram to identify faces used by thousands of police departments, the Department of Homeland Security and the FBI. An identification app can be created. The New York Times revealed the company's existence in 2020, with lawsuits filed across the country. They were brought together as a class action in federal court in Chicago.

The litigation has proven costly for Clearview AI, which will likely file for bankruptcy, according to court documents. The company and the people who sued it were “stuck together in a sinking ship,” the plaintiffs' lawyers wrote in a proposed settlement in court.

“These facts forced the parties to seek a creative solution by obtaining a percentage of Clearview's future value for the class,” added the lawyers from Lowy + Lowy in Chicago.

Anyone in the United States who has a photo of himself or herself posted publicly online — so almost everyone — can be considered a class member. The settlement will collectively give the members a 23 percent stake in Clearview AI, valued at $225 million, according to court filings. (Twenty-three percent of the company's current value would be about $52 million.)

If the company goes public or is acquired, those who submitted the claim form will get a deduction from the proceeds. Alternatively, the class may sell its share. Or the class could, after two years, choose to collect 17 percent of Clearview's revenue, which it would be required to set aside.

Plaintiff's attorneys will also be paid from the final sale or cash out. He said he would not ask for more than 39 percent of the money the class received. (Twenty-nine percent of $52 million would be about $20 million.)

“Clearview AI is pleased to have reached an agreement in this class action settlement,” said the company's attorney, Jim Thompson, a partner at Lynch Thompson in Chicago.

The settlement still requires approval from Judge Sharon Johnson Coleman of the U.S. District Court for the Northern District of Illinois. Notice of the settlement will be posted online in advertisements and on Facebook, Instagram, X, Tumblr, Flickr and other sites from which Clearview scraped the images.

While this may seem like an unusual legal remedy, there are comparable situations, said Samuel Issacharoff, a law professor at New York University. A 1998 settlement between tobacco companies and state attorneys general required the companies to pay billions of dollars over decades for health care costs.

“It was being paid for from their future income stream,” Mr Issacharov said. “States became the beneficial owners of companies moving forward.”

Jay Adelson, a class action lawyer, advocates “future stake settlements” in cases involving startups with limited funds. Mr. Adelson also filed a lawsuit against Clearview AI along with the American Civil Liberties Union, which was settled in 2022, with Clearview agreeing not to sell its database of 40 billion images to businesses or individuals. what was

Mr. Adelson, though, said there was “one factor” in the proposed settlement.

“Now you have people who have been injured by Clearview violating their privacy rights, interested in finding new ways to financially trample Clearview,” he said.

Evan Greer, director of privacy advocacy organization Fight for the Future, was also critical.

“If mass surveillance is harmful, the remedy should be to prevent them from doing it, not to pay the people who are harmed,” Ms Greer said.

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