Facebook Inc. disclosed a $550 million settlement in a class-action lawsuit over its use of facial-recognition technology in Illinois.

During the company's earning call, Chief Financial Officer Dave Wehner made the disclosure, updating the case that was mentioned in Facebook's 10-Q filing last quarter. "We decided to pursue a settlement as it was in the best interest of our community and our shareholders to move past this matter," a Facebook spokesperson said.

The settlement resolves a privacy related lawsuit. A fund of $550 million will be established for a class of Illinois Facebook users who challenged Facebook’s alleged violations of the Illinois Biometric Information Privacy Act. Given that the settlement is on behalf of a class of consumers, it will be subject to and not effective until it is approved by the District Court presiding over the case.

The settlement was reached by a trio of law firms that represents the plaintiff class. Chicago-based Edelson PC, known for its work in privacy, was the first law firm to uncover and bring to light potential violations of the Illinois Biometrics law by Facebook and other companies. After the firm filed the first suit against Facebook, similar cases were filed by Labaton Sucharow LLP and Robbins Geller Rudman & Dowd LLP. The cases were consolidated and transferred to the United States District Court in San Francisco. The three firms jointly litigated the case for nearly five years, before Judge James Donato, the Ninth Circuit Court of Appeals, and the United States Supreme Court.

The suit alleged that Facebook collected biometric information in the form of face prints, for the purpose of supporting its “face tagging” feature, in violation of the Illinois Biometric Information Privacy Act. Facebook has at all times denied any wrongdoing.

The case is bound to add to worries over the social networking company's record on privacy matters.