Facial recognition company Clearview AI has reached a groundbreaking class action settlement to address allegations of violating the privacy rights of millions of Americans. Filed in Chicago federal court on Wednesday, the agreement is notably unconventional as it does not specify a monetary payout upfront. Instead, it ties compensation to Clearview AI's future financial outcomes, such as its potential IPO or merger valuation.

The lawsuit, rooted in Clearview AI's alleged scraping of billions of facial images from the internet without consent, invoked Illinois' biometric privacy law. Although Clearview denies any wrongdoing, the proposed settlement now awaits approval from US District Judge Sharon Johnson Coleman.

In a related development earlier this year, Clearview AI agreed with the ACLU to restrict access to its facial recognition database for private entities and government agencies in Illinois for five years. The plaintiffs' attorneys acknowledged that this prior agreement influenced their approach to the class action settlement, adopting a structure that allows class members to share in potential future profits of Clearview AI.

The novel settlement approach, spearheaded by Loevy & Loevy, aims to provide meaningful relief to affected individuals while navigating Clearview AI's financial constraints. Attorney Jon Loevy highlighted that this solution allows class members to reclaim some ownership over their biometric data, reflecting a unique attempt to compensate for privacy violations in the digital age.