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Facebook has agreed to pay $550 million to settle a class-action lawsuit over its use of facial recognition technology in Illinois.

Three Illinois residents sued Facebook under a state law, the Biometric Information Privacy Act, one of only two in the nation to regulate commercial use of facial recognition. The class action, which involved gathering facial data for a feature that suggests the name of people in users' photos, could have exposed Facebook to billions in damages.

Under the agreement, the $550 million payout will go to eligible Illinois users and legal fees.

Facebook disclosed the settlement as part of its quarterly financial results.

The law firms representing Facebook users in the facial recognition suit called it the largest cash settlement ever to resolve a privacy related lawsuit. The settlement comes as rapidly growing practice of collecting biometric data stokes Orwellian alarm.

In a statement, Edelson, Robbins Geller and Labaton Sucharow said the plaintiffs will ask the district court to give preliminary approval for the settlement.

"This case should serve as a clarion call to companies that consumers care deeply about their privacy rights and, if pushed, will fight for those rights all the way to the Supreme Court and back until they are justly compensated," Paul Geller, the head of the consumer protection arm of law firm Robbins Geller, said in the statement.

State laws, such as a new one in California giving residents more expansive rights, are shielding consumers from invasive technology even as efforts on Capitol Hill to create a national framework stall. Illinois has the most comprehensive state law on facial recognition.

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