Approximately 614,000 Facebook users whose personal details appeared in ads on the site without their permission will each receive a $15 (£9.65) payout.
The names and pictures of an estimated 150 million Facebook members were used in Sponsored Stories, but only those who responded to an email from the site earlier this year will be compensated.
Privacy organizations will also receive some of the $20m (£12.9m) settlement.
Facebook said it was "pleased" the settlement had been approved.
The payout was approved by a US court on Monday following a class action filed against Facebook in 2011 by five of its users.
The group said their details had been used to promote products and services through the site's Sponsored Stories program, without paying them or giving them the choice to opt-out.
A Sponsored Story is a tailored advertisement that appears on members' Facebook pages, highlighting products a user's friends have endorsed or "liked" on the site.