The company has been under scrutiny since it disclosed that a third-party app accessed the personal information of 87 million people before selling it to Cambridge Analytica, the British political consulting firm, which also conducted digital operations for President Donald Trump’s 2016 presidential campaign.
The lawsuit against the world’s largest social media company claims that Facebook knew about the data collection and sale for two years before users were notified. Meanwhile, the company indicated that it vetted third-party apps, but did little by way of follow up checks, according to Washington, DC Attorney General Karl Racine.
“We’re reviewing the complaint and look forward to continuing our discussions with attorneys general in DC and elsewhere,” Facebook said in a statement.
The lawsuit could lead to a $5,000 civil penalty levied against Facebook for each violation of Washington’s consumer protection law, which could stack up to a figure close to $1.7 billion if the company had to pay out for every customer impacted.
The Washington lawsuit alleges that the third-party-app that collected the data — a personality quiz — had picked up data on 340,000 residents of the district. Just 852 of those users directly engaged with the app, however.
In addition to the data breach, Cambridge Analytic had previously come under scrutiny for its work for Mr Trump’s campaign. While working for the campaign in 2016, the company also provided services for a pro-Trump Super PAC Make America Number 1 Again, funded by Robert Mercer.
Working for both of those clients raised questions about campaign finance violations as it is illegal for campaigns to specifically coordinate with Super PACs that support their candidates because the former is allowed to raise unlimited sums of money from donors.
The consulting firm had also been subject to scrutiny after a four-month investigation by Channel 4 in 2017 that discovered —through candid videos of executives — the company allegedly used bribery stings, and honey traps during its opposition research operations.
The company responded to that investigation by suggesting that the videos were “edited and scripted to grossly misrepresent” the actions of the company. Alexander Nix, the executive in the videos, admitted he had “entertained a series of ludicrous hypothetical situations” but insisted that Cambridge Analytica did not engage in entrapment or bribery.
Facebook shares suffered their biggest drop since July in the wake of the news, closing down more than 7 per cent at $133.24. This extended a roughly five-month stretch since the company warned that profit margins would erode in coming years because of consumer and government pressure to better guard data and suppress objectionable content.
Facebook said in a statement: “We're reviewing the complaint and look forward to continuing our discussions with attorneys general in DC and elsewhere.”
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