The lawyers at United Online-owned Classmates.com are busy; the social networking site is paying up to $9.5 million, along with $1.3 million in legal fees, to settle a class action lawsuit charging that it violated members’ privacy rights. TechFlash — which first reported the settlement — says the site sent free subscribers promotional e-mails which (wrongly) implied that former classmates were trying to contact them in an attempt to get them to upgrade to paid subscriptions. Separately, Classmates.com is also being sued for making some user profile information public earlier this year. Members had the option to opt out — but plaintiffs in the case say the move is “confusing to consumers and is deceptive,” according to Wired.
The legal action comes as Classmates has gone through some high-level upheaval lately. Steven McArthur, who had been president of United Online’s Classmates Media unit, which includes Classmates.com, resigned earlier this month, according to an SEC filing. McArthur had held the post since August 2007. A spokesman tells TechFlash — which noted McArthur’s departure — that he did not know why the executive had resigned. During its most recent quarter, Classmates reported drops in both advertising and services revenues. The company did however report a 13 percent increase in paid accounts.