Facebook In-App Lawsuits Consolidated Into MDL

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Plaintiffs claim that Facebook violated California Family Code laws by refusing refunds to parents whose children had unknowingly made purchases via the company's gaming applications.

Friday, March 13, 2015 - The Judicial Panel on Multidistrict Litigation certified a series of lawsuits filed against Facebook concerning in-app purchases into multidistrict litigation on March 10. Similar lawsuits have been file against companies with comparable gaming systems such as Google, Apple and Amazon. Recent settlements in those cases reached eight figures, with Apple settling for $32.5 million and Google for $19 million. Those lawsuits took place in the Northern District of California federal court, the same location to which the cases against Facebook have been transferred.

Though the lawsuits were certified into multidistrict litigation, there were parts of the Facebook in-app transfer proposal that was not approved. The elements of the lawsuits that looked to award individualized restitution to plaintiffs that had endured unauthorized purchases due to Facebook apps were not included in the transfer. The JPML ruled that the volume of requests that made for individual refunds would be overwhelming, and that the motion would not be certified if they remained a part of the lawsuits. They did certify the lawsuits however, dismissing Facebook‘s argument that the claims made were too varied to combine them into multidistrict litigation.

The original lawsuit was filed by parents whose children bought virtual currency from the game "Ninja Saga,"which is purchased using real money. One of the parents allowed a $20 purchase with their credit card. After the purchase took place the card information was saved within the app, enabling continued purchases to be made. The child spent more than $100 within the game. Another parent had a similar experience with their child, whoever the total rung up in this instance topped $1000. The parent in the latter incident ended up receiving a partial refund for only $59.90.

The children who made the purchases claimed that they were not aware that the games have saved the adults credit card information and believed the ongoing transactions were taking place with virtual currency. The virtual currency in question in the lawsuits has been eliminated, replaced by a new payment platform called Facebook Payments.

The plaintiffs claim that the contracts presented for mobile games, which display a prohibitive message for users under the age of 18, do not go far enough in discouraging minors from interacting with the software. Under California law, these types of contracts make with minors are able to be voided if it is shown that a child has failed to employ reasonable judgement as to the content of the agreement. Since Facebook‘s policies adhere to California laws, it allows the framework of the contract with minors to become applicable nationwide.

The law, titled the California Family Code, was first invoked against Facebook in the lawsuit in 2012. The motion to consolidate the cases into multidistrict litigation was filed in August of 2014. Plaintiffs are claiming that Facebook violated this law by citing their policy of all sales being final as a defense for denying customers refunds.

The class includes potential plaintiffs ranging from 2008-2015, with parameters listing eligible class member including those affected up to four years before the original filing to the time of the certification. In addition to possible refunds, plaintiffs claim that they would like to see Facebook adjust the policies of the company pertaining to minors in accordance with California laws. Thus far, Facebook has simply chosen to halt its sales to minors.