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Facebook Inc (FB) Will Face a Class Action Lawsuit Over the Use of Credit Card by Minors

Federal judge states that Facebook Inc (NASDAQ:FB) must face a class-action lawsuit nationwide that seeks the social media company to refund the money that children spent with their parent’s credit cards without their permission, as reported on Reuters.

Facebook, is FB a good stock to buy, Facebook Inc (FB).

Facebook Inc (NASDAQ:FB) is currently facing a class-action lawsuit in San Jose, California where the U.S. District Judge Beth Labson Freeman stated that a class of plaintiffs estimated in the hundreds of thousands might press the claim that Facebook should change the way it handles transactions made online by minors.

This is not the first time Facebook Inc (NASDAQ:FB) will be in court for this issue. In 2012, the company was sued by a woman in Phoenix, Arizona to receive a refund for what she stated were unauthorized Facebook Credits to purchases made by her son. Facebook Credit is a digital currency on the social networking site that can be used in apps and games. Minors have been using their parents’ credit cards and the parents wanted their money back.

The terms of service of Facebook at that time stated that anyone under 18 can only purchase Facebook Credits with the help of a parent. But this woman claimed that her son was unaware that he was spending real money. Facebook’s Manager of Payment Operation stated during a court filling that over $5 million in Facebook Credits were purchased in 2011 by minors age 13 to 17. This was an issue again for Facebook when parents filled a lawsuit against Facebook in late 2013. This time the company’s defense stated that children were only making those claims because parents would suffer consequences such as punishment and allowance reduction.

The court responded to Facebook’s defense stating that in the state of California, the law has a clause in the California Family Code that voids contracts and payments made by children without their parent’s permission. After this lawsuit, Facebook discontinued Facebook Credits and replaced them with Facebook Payments.

This time, the lawsuit was brought by 2 children and their parents. One of them claimed that his mother allowed him to spend $20 on her credit card for a game but she was charged for several hundred dollars for purchases her son thought were made with virtual currency. While the other child says he took a debit card without permission and spent $1,059. The federal judge has already set a date for the trial: October 19.

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