Facebook Must Face Class Action Lawsuit over Minors’ Credit Purchases

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Last week, a California federal judge ruled that Facebook Inc. would have to face a class action lawsuit related to minors who made Facebook Credit purchases without their parents’ permission. However, the judge dismissed the parents’ claims in the Facebook Credit lawsuit.

The Facebook Credit class action lawsuit was initially filed by two children and their adult parents and guardians in 2012. They alleged that the minor plaintiffs used their parents’ credit and debit cards to purchase hundreds of dollars’ worth of Facebook Credits, without their parents’ permission. According to their complaint, Facebook refused to refund the purchases even after the parents attempted to notify Facebook that the purchases were made without their consent.

By filing the Facebook class action lawsuit, the plaintiffs sought “a judicial determination that their purchases of Facebook Credits are void under California Family Code section 6701(c),” which states that minors cannot form contracts “relating to any personal property not in (their) immediate possession or control.” Because the minor plaintiffs used their parents’ credit or debit cards without permission to purchase Facebook credits, the plaintiffs argued that the contracts should be void under California law. The plaintiffs also brought claims under California’s Unfair Competition Law.

U.S. District Judge Claudia Wilken granted Facebook’s motion to dismiss the parents’ claims in the class action lawsuit, finding that they failed to state a claim under California’s Unfair Competition Law. “Although the adult Plaintiffs have sufficiently plead that they, unlike the minor Plaintiffs, suffered economic harm, they have not identified any specific conduct by Facebook that might support their UCL claim,” the judge wrote. “The losses they suffered derive, at bottom, from the unauthorized use of their credit cards by the minor Plaintiffs.”

Judge Wilken found that any economic harm suffered by the parents would be cured by their children’s legal claims under the California Family Code, and dismissed their claims from the class action lawsuit.

In its motion to dismiss the Facebook class action lawsuit, the social network argued that the minor plaintiffs did not sufficiently argue that they suffered an injury-in-fact because they did not allege they purchased the Facebook Credits with their own money. Judge Wilken disagreed with this assertion, finding that the minor plaintiffs demonstrated “an actual controversy over the rights of minors to disaffirm their purchases of Facebook Credits.”

While Friday’s decision will bar the adult plaintiffs from proceeding in the Facebook class action lawsuit, minor children who spent their parents’ money on Facebook Credits without their parents’ consent will be allowed to remain involved in the action.

The plaintiffs are represented by John R. Parker Jr. and C. Brooks Cutter of Kershaw Cutter & Ratinoff LLP, Daniel B. Edelman of Katz Marshall & Banks LLP, and Benjamin Edelman.

The Facebook Credit Class Action Lawsuit is I.B., by and through his Guardian ad Litem Bryan Fife, et al. v. Facebook Inc., Case No. 12-18994-CW, in the U.S. District Court for the Northern District of California.