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Facebook Faces Class Action Lawsuit Over Purchases By Minors

Tuesday, July 21st, 2015

Social networking behemoth Facebook is staring at yet another legal battle in the court after a federal judge ruled that the organization must face a class action lawsuit over the issue of allowing minors to buy things online. This is indeed a good news for a number of aggrieved parents from all over United States who have alleged that the social networking site allowed their children to make purchases via their credit cards and then refused to issue refunds when they lodged a complaint. After Apple and Google were forced to issue millions of dollars in refunds last year, this represents yet another instance when a Silicon Valley company is facing the heat over how it handles monetary transactions made by minors.

While delivering the verdict on a case filed by two minors and their parents in California; District Judge Beth Labson Freeman said that the California state law protects those whose wards buy things due to a lack of judgment. One of the child who filed the case said that while his mother allowed him to spend $20 on the “Ninja Saga” game, he ended up spending hundreds of dollars through purchases made via the in-game currency (which in turn was purchased with her mother’s credit card). Similarly, the second child spent over thousand dollars to make purchases by using the debit cards of his parents without asking for their permission.

The case pertains to Facebook Credits which was promoted as a virtual currency to allow in-game purchases. While Facebook Credits was indeed a virtual currency, it could be purchased only after paying real money to Facebook. And once the currency was purchased through debit or credit cards, Facebook allows unlimited purchases even if they were made by the minors.

The parents claimed that when they asked for a refund for purchases made by their children, Facebook refused to issue it by citing its “all sales are final” policy. The plaintiffs also accused the social site of violating California’s law which requires companies to issue refunds or notify the customers through notices. Facebook defended itself by saying that since each claim is different from one another, they should not be clubbed together into a class action lawsuit. However, Freeman overruled the arguments presented by Facebook and allowed the plaintiffs to file a class action lawsuit against the company.

While the judge has allowed the parents to file a class action suit against Facebook, she has also barred them from seeking refunds as a group. The judge said that since the purchase history varies from one plaintiff to another, the precedent set by U.S. Supreme Court cannot not be used to claim refunds. However, the judge did rule that plaintiffs are free to seek refunds from Facebook on an individual basis.

The lawyer for the plaintiffs expressed satisfaction over the verdict and also added said that Facebook is different from other businesses since it treats children at par with adults as far as purchases made through its site were concerned. On the other hand, Facebook expressed its disappointment with the judgment and has vowed to fight the class action lawsuit vigorously.

July 21, 2015

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