Facial recognition startup Clearview AI reached a settlement on Friday in an Illinois lawsuit that alleged its massive collection of facial photos violated the privacy rights of people who took them, in a deal that lawyers estimate could be worth more than $50 million.
But the unique agreement gives the plaintiffs in the federal lawsuit a portion of the company’s potential value rather than a traditional monetary award. Attorneys’ fees, estimated at $20 million, will also be deducted from the settlement.
Judge Sharon Johnson Coleman of the Northern District of Illinois granted tentative approval to the agreement on Friday.
The lawsuit consolidates lawsuits filed across the country against Clearview, a company that compiled a database of photos from social media and across the internet and sold it to businesses, individuals and government agencies.
The company settled a separate lawsuit in Illinois in 2022 alleging violations of privacy rights, agreeing to stop selling access to its database to private companies and individuals. The agreement still allowed Clearview to work with federal agencies and local law enforcement outside of Illinois, which has strict digital privacy laws.
Clearview did not admit any liability as part of the latest settlement agreement.
“Clearview AI is pleased to have reached an agreement to settle this class action lawsuit,” James Thompson, an attorney representing the company in the lawsuit, said in a written statement Friday.
John Loevy, the plaintiffs’ lead attorney, said the agreement was a “creative solution” made necessary by Clearview’s financial situation.
“Clearview simply did not have the financial resources to pay the plaintiffs fair compensation, so it had to find a creative solution,” Loeb said in a statement. “This settlement provides finality for the privacy victims and gives the plaintiffs some restitution for their biometric ownership.”
It’s unclear how many people will be included in the settlement, which is broad in scope and covers anyone whose images or data were stored in the company’s database and who lived in the US after July 1, 2017.
A nationwide campaign to inform potential plaintiffs is also part of the agreement.
Clearview and the plaintiffs’ lawyers worked with former federal judge Wayne Andersen, who is now mediating the case, to come up with the settlement. In court documents outlining the agreement, Andersen bluntly stated that the startup would not have been able to pay the legal judgment if the litigation had continued.
“Clearview did not have the funds to pay the multi-million dollar judgment,” he said in the filing. “Indeed, there was great uncertainty as to whether Clearview would have the funds to see the case through to a conclusion, much less cover the judgment.”
But privacy advocates and other legal action advocates said the agreement was disappointing because it doesn’t change the company’s business.
Sejal Zota, attorney and general counsel for Just Futures Law, a group representing plaintiffs in the California lawsuit against the company, said the agreement “vindicates” Clearview.
“It doesn’t address the root of the problem,” Zota said. “Clearview will continue its practice of collecting people’s faces without their consent and selling them to train AI technology.”
