In May 2021, TikTok agreed to settle a class action lawsuit that accused the platform of illegally collecting personal data from users and underage children without proper consent. The lawsuit alleged that TikTok violated state and federal privacy laws by capturing biometric data from users’ facial features and tracking user data without permission. TikTok denies any wrongdoing, but agreed to pay $92 million as part of the settlement.
The settlement, if approved, would provide monetary relief to TikTok users who filed valid claims, as well as cover legal fees. The plaintiffs alleged that TikTok’s data collection practices were manipulative and unethical. TikTok maintains that it was transparent about its privacy policies. The settlement aims to resolve these disputes.
Settlement Details
The total settlement amount is $92 million. This settlement was reached to resolve a class action lawsuit that alleged TikTok violated Illinois biometric privacy laws by collecting users’ biometric data without consent (https://www.tiktokdataprivacysettlement.com/).
The settlement was preliminarily approved by a federal judge in the Northern District of Illinois on February 25, 2022. Final approval is still pending, but if approved, the settlement fund will be used to pay valid claims from class members as well as attorneys’ fees and expenses.
According to the settlement website, over 89 million TikTok users are eligible to submit a claim. To be eligible, class members must have used the TikTok app before September 30, 2021 while residing in the U.S. The class covers both current and former TikTok users within this timeframe (https://topclassactions.com/lawsuit-settlements/closed-settlements/tiktok-data-privacy-92m-class-action-settlement/).
Who is Eligible
According to the settlement FAQ page, there are two main classes of people eligible for the settlement:
The Nationwide Class includes all persons residing in the United States who used the TikTok app before September 30, 2021. This covers any users with an account registered in the US regardless of their current location or citizenship status.
The Illinois Subclass includes Illinois residents who used TikTok while under the age of 18. This covers users who were minors living in Illinois when they created their accounts.
So in summary, eligibility is based on location and age criteria. All US-based users are covered in the nationwide class regardless of age. Illinois minors are also included in a separate subclass.
How Much Each Person Gets
The settlement provides payment tiers based on how actively a user engaged with the Musical.ly and TikTok apps between 2015 and 2022. The tiers and estimated payout amounts are:
- Group 1 (Most Active) – Estimated minimum payment of $397. Users who appeared in videos, posted videos, etc. frequently.
- Group 2 (Active) – Estimated minimum payment of $187. Users who posted some videos or regularly used the apps.
- Group 3 (Inactive) – Estimated minimum payment of $55. Users who occasionally posted videos or engaged with the apps.
- Group 4 (Minimal) – Estimated minimum payment of $7. Users who registered but hardly used the apps.
Several factors determine which payment tier a person falls into, including the number of videos uploaded, videos appeared in, messages sent, and time spent on the apps (according to NBC News). The settlement website also states that payment amounts may be increased if not enough class members file claims.
How Payments Are Calculated
The settlement administrators have devised a formula to calculate each claimant’s payment based on several variables, including the total number of valid claims filed. According to the settlement website (https://www.tiktokdataprivacysettlement.com/), the formula considers the following:
- The number of months the claimant had an account
- The number of videos the claimant appeared in
- The number of videos posted by the claimant
- Whether the claimant’s videos were made private
- Whether the claimant had a registered email address associated with their account
These variables will be used to calculate individual “point values” for each claimant. The points will then be divided by the total points for all claimants to determine what percentage of the net settlement fund each person receives.
According to TikTok influencer @seansvv (https://www.tiktok.com/@seansvv/video/7226909021645671723?lang=en), the minimum payment will be around $5-6 and the maximum will be around $1000. However, the final amounts will depend on the total number of approved claims.
How to File a Claim
The deadline to file a claim is March 1, 2023. Claims can be submitted online at the settlement website
https://tiktokdataprivacysettlement.com/submit-claim.php or mailed to the claims administrator at the address provided on the website.
To file a valid claim, you must provide your name, address, phone number, email address (if available), TikTok user name(s), and attest that you are a class member who used the TikTok app before September 30, 2021. The claims administrator will verify your class membership using records provided by TikTok.
Claimants may be required to provide additional documentation if there are issues verifying basic information. Claims will be rejected if the required information cannot be verified.
Payment Delivery Method
According to the settlement website, payments will be delivered in one of two ways:
Check – If you filed a valid claim and provided your address, the settlement administrator will mail you a check. Checks will be sent within 30 days after the settlement claim deadline passes, which is currently set for March 1, 2023.
Digital Payment – If you filed a claim and provided details for PayPal, Venmo, virtual prepaid card, or another electronic payment service, you may receive your payment digitally. The timing is the same – within 30 days of the claim deadline.
So in summary, claimants can choose to receive their settlement payment either by check in the mail or through a digital payment method. Payments will go out within about a month of the March 1, 2023 claim deadline, as long as you filed your claim on time with the required details.
What Happens if Money is Left Over
If there is any money left over after the initial distribution to claimants, there are a few options for what can be done with the remaining funds according to court discretion:
The settlement administrators may do a second distribution to claimants who cashed the first check sent to them. This allows more money to go directly to eligible class members.
The court may also order the leftover settlement funds to be donated to a charitable organization relevant to the case. For example, some privacy-related non-profits that advocate for stronger protection of user data could potentially receive a donation.
Ultimately the judge has broad discretion on residual fund distribution. Key priorities are making sure the settlement money goes to its intended recipients or causes aligned with the spirit of the lawsuit (source).
Tax Implications
One question many people receiving payments from the TikTok settlement have is whether the money will be taxable. According to the IRS, legal settlements are generally taxable income https://www.irs.gov/government-entities/tax-implications-of-settlements-and-judgments. There are some exceptions, such as compensation for physical injury and illness, but lawsuits over data privacy issues like this TikTok case do not qualify for those exceptions.
The settlement administrator will issue a 1099 tax form to all recipients who get $600 or more. This form reports the payment amount to the IRS. When filing taxes for the year you received the payment, you must report the 1099 income on your tax return. The exact amount of tax you’ll owe depends on your tax bracket and other factors.
In short, the TikTok settlement payments are considered taxable income by the IRS. Recipients should plan to pay taxes on the amount they receive, just like other income. Those getting $600+ will receive a 1099 to help them report the income.
Conclusion
In summary, the TikTok class action settlement over privacy concerns will provide payments to users based on the number of eligible claimants. While the final individual payment amounts are still to be determined, it’s estimated that each claimant will receive approximately $5-25, with a total settlement fund of $92 million.
To be eligible, you must have used TikTok prior to September 30, 2021 and submit a valid claim form before the deadline. Payments will be distributed electronically or by check after final approval, likely by early 2023. Taxes may apply depending on your specific circumstances.
This settlement provides some compensation to TikTok users amid ongoing concerns over privacy and data collection practices. Check the settlement website for additional details and updates on the claims process.
