Facebook to Refund Kids’ Sprees on Parents’ Cards

SAN JOSE, Calif. (CN) - Facebook agreed to a settlement with two kids who requested refunds after using their parents' credit cards to purchase credits for online games hosted by the social media giant.

U.S. District Judge Beth Labson Freeman said she was ready to approve the settlement with a few minor changes and indicated she will award attorney's fees to the plaintiffs.

The case stems from a suit filed in Santa Clara Superior Court in 2012, where two minors, known in court documents as I.B. and J.W. sued Facebook through their mothers, Glynis Bohannon and Julie Wright. Facebook had the case removed to Federal Court after Bohannon amended her suit to include a putative class.

Bohannon had given her son permission to use her credit card one time on Facebook to purchase "credits" for a game that he played on the social media site, but he made additional purchases in the game without her knowledge. The boy was unaware that he was spending real money, according to the complaint.

Julie Wright said that her son bought more than $1,000 in credits, charged to the debit card she shares with her husband, even though neither parent gave him permission to make any purchases.

The plaintiffs argued Facebook was obligated to refund those charges under California family law, which allows minors to void contracts in various situations.

Under the terms of the settlement, Facebook has agreed to reimburse the two minors. And although a class has been certified in the case, class members will receive no money.

Instead, Facebook agreed that its future refund policies and practices will conform to California family law, and the company has made alterations to its terms to allow for the possibility of voiding contracts with minors.

The biggest feat of the settlement is that Facebook has passed along its payment terms to the developers of its online games which specifically target minors, class attorney C. Brooks Cutter said at the settlement hearing.

"Facebook is warning its developers that these transactions are voidable," Cutter said. "Facebook has enormous power in the game developer market so this is important for public rights."

The social media giant will also incorporate a queue on its site to make the refund process more user-friendly.

"An important public interest issue was address (in this case)," Freeman said, adding that the settlement also warranted attorney's fees to the plaintiffs consistent with other similar consumer protection cases.

"This provides significant relief to a nationwide class of minors."

Cutter told Courthouse News he was pleased the settlement was moving forward.

Facebook also expressed satisfaction with the settlement.

"We believe that the proposed settlement provides a fair and reasonable resolution of the claims raised in the case," the company said in an email sent to Courthouse News.

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