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Published 12:54 27 Jul 2022 BST
Updated 14:48 27 Jul 2022 BST
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The settlement will see the company now paying out $1.93 million on top of the $1.2 million in legal fees for those who filed the lawsuit.
Customers who have bought the palette are now also entitled to return the product for a full refund of the original retail price.
The Neon Obsessions palettes are no longer being manufactured and have been removed from shelves across the US and listed as "out of stock" in the UK.
Back in 2020, Huda was named by Forbes as one of America's Richest Self-Made Women after starting up the business in 2013 with a fake eyelash range and expanding from there.
Huda was estimated to make $250 million through Huda Beauty in annual sales.
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