Judge Requests Additional Information Before Ruling on $92 Million Settlement in TikTok Class Action

The federal judge presiding over a class action lawsuit against TikTok Inc. recently continued settlement discussions, pending additional information, prior to ruling on a $92 million agreement. U.S. District Judge John Lee of the Northern District of Illinois cited concerns about the predicted claims rate and proposed notice plan as part of his decision.

The Case Against TikTok

At the heart of the TikTok case is concern over biometric information privacy. Members of the plaintiff class claim that TikTok collected information about users’ locations, contacts, and facial features. TikTok then sent this data to its Chinese parent company, ByteDance.

According to the plaintiffs, the information TikTok shared with ByteDance included information about users who are minors. The plaintiffs claim TikTok violated one or more biometric privacy laws in the U.S., including Illinois’ Biometric Information Privacy Act. Investigators working for the plaintiffs asserted that TikTok hid the source code that operated their data collection and sharing measures. This made it more difficult for users to see what data the app collected or how it used that data.

TikTok claims that it did not violate U.S. state or federal privacy laws. Rather, the company has asserted that its app is neither collecting biometric information nor sending it to ByteDance. Even if it were collecting and transmitting data, however, TikTok argues its actions would still comply with applicable privacy laws. This is because TikTok’s terms of service clearly state TikTok might collect and use information in this way.

The Terms of the Settlement Plan

The proposed settlement plan applies to 89 million TikTok users in the United States. Allegedly, TikTok collected and sold users’ data to advertisers or communicated to ByteDance. The proposed settlement also contained measures that would affect TikTok’s data collection and sharing practices.

The settlement terms included a promise by TikTok not to record users’ biometric information, including facial characteristics. The app would so disable GPS tracking so that TikTok could not track user locations. TikTok further agreed to stop sending U.S. user data to its parent company in China. Additionally, TikTok agreed to prevent the app from collecting any data on draft videos before they were uploaded and published.

Settlement Concerns

Judge Lee, however, raised several concerns regarding the proposed settlement. One of these concerns addressed the predicted claims rate. The rate was estimated to be around 2%. Lee asked why TikTok did not plan to communicate news about the settlement to its users through the TikTok app itself. “It seems only natural if a settlement is supposed to benefit TikTok users, notice through the app would be a natural way to provide them notice,” said Lee.

TikTok argued that email would be a more effective way to reach users covered by the settlement, particularly as it could target parents of affected minors rather than the minors themselves. The company also proposed reaching out on Facebook and other social media sites in order to better reach both TikTok users and parents of young users.

However, lawyers for objecting parties noted that TikTok has emails for only about 30 million users when the settlement affected 89 million users.

What’s Next for the TikTok Class Action?

One potentially instructive example from Facebook, which recently paid to settle claims that it too had violated biometric privacy laws. Facebook shared news of the class action settlement to affected users through its own Newsfeed, as well as an Internet ad campaign. Measures like these may extend the reach of TikTok’s settlement news, and may thus be more acceptable.

Resolving this case doesn’t mean the end of TikTok’s legal challenges, either. Currently, the Committee on Foreign Investment in the United States is working on a national security review of TikTok. The findings may result in a need for TikTok to change its corporate structure or take other measures in order to continue operating in the United States.

TikTok also recently faced scrutiny from the Federal Trade Commission regarding its collection of personal information from minors. The company paid a fine of $5.7 million to the FTC in connection with that complaint.

As for the current class action’s progress, Judge Lee requested that counsel files supplemental memos addressing the concerns he raised. Settlement talks will resume in a hearing scheduled for April 6, 2021.