Clearview AI Used Your Face. Now You May Get a Stake in the Company.

A facial recognition start-up, accused of invasion of privacy in a class-action lawsuit, has agreed to a settlement, with a twist: Rather than cash payments, it would give a 23 percent stake in the company to Americans whose faces are in its database.

Clearview AI, which is based in New York, scraped billions of photos from the web and social media sites like Facebook, LinkedIn and Instagram to build a facial recognition app used by thousands of police departments, the Department of Homeland Security and the F.B.I. After The New York Times revealed the company’s existence in 2020, lawsuits were filed across the country. They were consolidated in federal court in Chicago as a class action.

The litigation has proved costly for Clearview AI, which would most likely go bankrupt before the case made it to trial, according to court documents. The company and those who sued it were “trapped together on a sinking ship,” lawyers for the plaintiffs wrote in a court filing proposing the settlement.

“These realities led the sides to seek a creative solution by obtaining for the class a percentage of the value Clearview could achieve in the future,” added the lawyers, from Loevy + Loevy in Chicago.