In May 2021, a class action lawsuit was filed against TikTok and its parent company ByteDance alleging violations of state and federal laws regarding the collection and use of personal data from TikTok users. The lawsuit claimed that TikTok illegally collected biometric identifiers, personal information, and content from users without proper consent, especially from minors. In February 2022, TikTok agreed to settle the class action for $92 million, pending court approval.
The TikTok Class Action Lawsuit
The lawsuit against TikTok was filed in November 2021 in the U.S. District Court for the Northern District of Illinois. It alleges that TikTok secretly collects large amounts of personally identifiable user data and private information without users’ consent and shares that data with the Chinese government (1).
The plaintiffs argue that TikTok’s data collection practices violate multiple laws, including the Illinois Biometric Information Privacy Act and federal laws like the Video Privacy Protection Act, the Computer Fraud and Abuse Act, and the California Consumer Privacy Act. They accuse TikTok of collecting biometric data like facial geometry scans without informing users.
According to the lawsuit, TikTok transfers private and personally identifiable user data and content to servers in China, where it is accessible to the Chinese government. This raises national security concerns, especially for U.S. military personnel who use the app (2).
The class action was brought on behalf of TikTok users in the U.S. who used the app before September 30, 2021. It seeks to make TikTok stop its unlawful data collection practices and pay damages to affected users.
1. https://www.nbcnews.com/news/us-news/need-know-tiktoks-class-action-lawsuit-rcna5781
2. https://topclassactions.com/lawsuit-settlements/privacy/tiktok-class-action-claims-company-collects-massive-amounts-of-user-data/
Settlement Terms
The settlement provides payments to users who registered or used TikTok in the United States while under the age of 13 between January 1, 2014 and December 31, 2020. Those eligible may receive a portion of the $92 million settlement fund.
To be eligible, individuals must have had a TikTok account while under 13 and their personal information was collected by TikTok without verified parental consent. The settlement site states that most users should receive a payment of approximately $5.00, while users who submit more detailed claim forms with proof of usage could receive up to 6 times that amount.
As part of the settlement, TikTok has also agreed to change its data collection practices for minors. They will delete personal information collected from children under 13 without consent, require parental consent for users under 13 to post videos publicly, and provide additional parental control features.
Sources:
https://www.tiktokdataprivacysettlement.com/
https://ads.tiktok.com/i18n/official/policy/payment-terms
Settlement Payout Amounts
The settlement provides monetary relief based on class members’ usage of the TikTok app before September 30, 2021. Payout amounts are tiered based on how many videos a claimant appeared in or uploaded:
- For members who submitted a video using TikTok, payouts are:
- $27.84 for 1-5 videos
- $55.68 for 6-10 videos
- $83.52 for 11-15 videos
- $111.36 for 16-20 videos
- For members who appeared in a video uploaded to TikTok by another user, payouts are:
- $5.68 for 1 video
- $11.36 for 2-3 videos
- $34.08 for 4-9 videos
- $68.16 for 10+ videos
According to the settlement website, minors who used the app will receive approximately double the settlement relief awarded to adult users.
How to File a Claim
To file a claim and receive a payment from the TikTok class action settlement, you must submit a completed claim form by the deadline. The easiest way to submit a claim is through the settlement website.
To submit a claim online, you need to provide your name, address, phone number, email address, and TikTok username if you have one. You must verify that you are a class member by confirming you used the TikTok app before September 30, 2021 while under the age of 13, or that your child under 13 used the app.
The deadline to file a claim online is March 1, 2023. Claims can also be submitted by mail and must be postmarked by March 1, 2023. Full instructions for submitting a claim by mail are available on the settlement website.
Payment Method
The settlement administrator is using PayPal to distribute the settlement funds to eligible claimants. Payments are being sent to the email addresses associated with claimants’ PayPal accounts. If you do not have a PayPal account, you can still receive payment by providing the settlement administrator with a valid email address when submitting your claim (source: Home | Musical.ly and/or TikTok Class Action).
According to reports from users who have already received settlement payments, the funds are being distributed via PayPal (source: TikTok settlement: Users report Venmo, paypal payments). So it appears PayPal is the primary method being used to send out the settlement payouts to eligible claimants.
When Will Payments Be Sent
According to the settlement website, settlement payments started being distributed in October 2022 after all case appeals were dismissed by the court on August 30, 2022 (TikTok: Home). The settlement administrator began issuing payments on October 26, 2022 to valid claimants (Tiktok Settlement).
As of late October 2022, some recipients reported already receiving their settlement payouts via PayPal, with more payments expected to go out through November and December 2022. The settlement website states that all payments should be sent within 90 days of the appeals being dismissed, meaning the full distribution is expected by the end of 2022 (Did You Receive a Payout From TikTok? It’s Part of a $1.1 …).
Recipients are advised to allow time for processing and check their email and PayPal account over the next few months for their settlement payment.
Taxes on Settlement Payments
According to Reddit user lawtechie in a post titled “TikTok Class Action Lawsuit Settlement Payout Tax Question”, settlement payments from the TikTok class action lawsuit are considered taxable income and you must report the payment when filing your taxes.[1]
The settlement payment will be treated as “other income” and should be reported on Form 1040 Schedule 1. You do not have to file any special forms to report the settlement payment. The full amount of the payment will be considered taxable income.
It’s important to keep records of any settlement payments received, as you will need to provide this information when filing your tax return. Taxes owed will vary depending on your tax bracket and other factors. Consult a tax professional if you need help determining how much tax you’ll owe on a settlement payment.
Criticism of the Settlement
Many have criticized the TikTok settlement for not going far enough to change the app’s data collection practices. According to some critics, the $92 million payout is relatively small compared to the company’s worth, and does little to deter it from continuing to harvest users’ biometric data without proper consent [1]. There is concern that even after this settlement, TikTok can continue amassing user data into databases without fully informing users or guarding their privacy rights [2]. Some feel the settlement should have included stronger reforms to TikTok’s data practices, not just monetary payouts [3]. Overall, critics argue the settlement does not go far enough to institute meaningful change at TikTok or properly compensate users.
Conclusion
In summary, a class action lawsuit was filed against TikTok alleging violations of privacy and data collection laws. TikTok agreed to settle the lawsuit for $92 million, pending court approval. Eligible claimants can receive a portion of the settlement fund, estimated to be around $5-25 per person if all 89 million potential claimants submit valid claims.
To receive a payout, you must submit a claim by the March 1, 2022 deadline. Claims can be submitted online or by mail. If approved, settlement payments will be distributed via PayPal, Venmo, prepaid card or digital check. Taxes may be withheld from settlement payments over $600.
Some have criticized the settlement amount as too low compared to the company’s worth and the number of users affected. However, it does provide some monetary relief and require TikTok to be more transparent about its data collection practices. Claimants interested in the settlement should submit claims soon to receive their portion of the fund.
