Facebook Settles Suit Over Purchases By Minors

Facebook Settles Suit Over Purchases By Minors Spencer E. Holtaway/flickr

SAN FRANCISCO — As part of a deal to settle a class action lawsuit, Facebook Inc. has agreed to make it simpler for minors to get refunds for online purchases.

In court papers Friday, the company agreed to make it clearer to minors that they need their parents’ permission when making purchases on Facebook.

The proposed deal, which provides no cash to class members, is subject to approval from U.S. District Judge Beth Labson Freeman of the Northern District of California.

C. Brooks Cutter, of Cutter Law, lead counsel for the plaintiffs, said that Freeman made it clear at the class certification hearing in the case last year that she was “never going to certify a class for damages.”

“Given that, we achieved everything that we thought that was obtainable for the class,” said Cutter, whose group is seeking $1.25 million in attorney fees and roughly $29,000 in costs.

The plaintiffs, a group of parents suing on behalf of children who allegedly racked up hundreds of dollars in charges making purchases in Facebook applications, sued the social networking site in 2012. They claimed that the company’s refusal to refund the money violated various California state consumer protection, business and family laws.

Freeman, who took the case over in 2014 after taking the federal bench, certified a nationwide class of minor Facebook users in March on claims for injunctive and declaratory relief under the California Family Code. Freeman, however, denied the plaintiffs’ bid to certify a class to pursue restitution finding that the amount due each class member would depend on individual circumstances and “thus cannot be determined formulaically.”

Following Freeman’s decision, the parties met for an all-day mediation session in August with Edward Infante, the Northern District of California’s former chief magistrate judge who is now a mediator at JAMS. Infante continued to supervise settlement discussions through December when the current deal was reached. In a declaration filed with the settlement papers Friday, Infante wrote that he backed the proposed settlement.

“In my opinion, given the only claim available to plaintiffs after Facebook’s successive motions to dismiss was their claim for declaratory relief, I do not think any kind of class-wide remedy of damages or restitution could ever be awarded in this case,” Infante wrote.

As part of the deal, Facebook has agreed to keep language in its app developer agreements for three years that makes clear that transactions with minors may be voidable. The company also agreed to include a checkbox on its refund request form to indicate when a purchase was made by a minor and to train employees to deal with those requests. The company also agreed to include the following statement on purchase receipts sent to minors in the U.S.: “Please always make sure you have your parent or guardian’s consent to use their payment sources.”

A Facebook spokesperson said in an emailed statement that the proposed deal “provides a fair and reasonable resolution of the claims raised in the case.”

“Although our existing practices comply with applicable law, we have agreed to enhance our disclosures and processes relating to refund requests,” the spokesperson wrote.

Facebook was represented in the suit by a team from Cooley led by Michael Rhodes.

Sacramento’s Cutter Law, Washington, D.C.’s Katz, Marshall & Banks, and Brookline, Mass., solo practitioner Benjamin Edelman represented plaintiffs..

Contact the reporter at rtodd@alm.com.

LOAD MORE
Industry: