Facebook has settled a class action lawsuit over its use of facial recognition technology for more than $800 million in a result that will make other tech companies “very nervous”.

Facebook quietly settled the case in Illinois recently for $US550 million, its quarterly earning results revealed.

The class action centred on the social media giant’s ‘Tag Suggestions’ feature, which used facial recognition technology to suggest the names of people in users’ photos.

The service analysed biometric details of individual’s faces, including the distance between their eyes, their noses and other features.

Facebook also kept a database of these face templates.

The service was launched in 2011 and was turned on by default, with users able to opt out of it.

The class action lawsuit, launched in 2015, claimed that the service breach Illinois’ 2008 Biometric Information Privacy Act, which protects an individual’s “concrete interests in privacy”.

Under the state law, Facebook could have been up for damages of up to $US1,000 for each negligent violation and up to $US5,000 for each intentional or reckless violation.

The lawsuit argued that Facebook collected the highly sensitive biometric information without the informed consent of users and without telling them for how long this data would be kept.

Late last year, Facebook last a Federal Court appeal to have the case thrown out, with the judges ruling that the facial recognition could violate the state’s privacy law.

Lawyers for the Facebook users’ said that biometric data is the most personal information an individual possesses and that there is “simply no recourse” if it is compromised.

“It’s not like a Social Security card or credit card number where you can change the number. You can’t change your face,” the lawyer said.

Facebook had previously described the claims as “baseless”.

Facebook’s pay-out will go to the eligible users in Illinois impacted by the service, along with paying for the plaintiff’s legal fees.

The pay-out was included in Facebook’s general and administrative costs, which have risen by 87 per cent from last year.

“We decided to pursue a settlement as it was in the best interest of our community and our shareholders to move past this matter,” Facebook chief financial officer David Wehner said in the earnings report.

Lawyer Jay Edelson, who represented the Facebook users in the class action, said it was a victory for privacy.

“From people who are passionate about gun rights to those who care about women’s reproductive issues, the right to participate in society anonymously is something that we cannot afford to lose,” Edelson said.

The Illinois privacy law requires companies to obtain written permission before they collect an individual’s biometric information, and gives residents the ability to sue companies for up to $US5,000 for each privacy violation.

Electronic Privacy Information Center executive director Marc Rotenberg said Facebook’s pay-out and the strong privacy law will have other tech companies worried.

“The Illinois law has real teeth,” Rotenberg told the New York Times. “It pretty much stopped Facebook in its tracks.

“Tech firms and other companies that collect biometric data must be very nervous right now.”

The Tag Suggestions feature was also part of a $US5 billion settlement Facebook made with the Federal Trade Commission in Europe over privacy violations in 2012, with the service deactivated that year.

Last year, Facebook rolled out a new opt-in facial recognition service for users around the world, quietly ditching the Tag Suggestions at the same time.

The new service allows users to more actively manage the use of facial recognition on the platform, and to decide whether to allow the technology to identify the user in their friends’ photos and on their own photos.