I.B. v. Facebook, Inc.
No specific reporter information provided (2012)
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Rule of Law:
Under California law, a minor has the right to disaffirm a contract for goods or services, including intangible digital goods, and is entitled to recover all consideration paid, even if the minor has already consumed the goods and cannot restore them to the other party.
Facts:
- Facebook, Inc. operates a social network and provides a virtual currency system called Facebook Credits for in-game purchases.
- A minor, I.B., received permission from his mother, Glynnis Bohannon, to make a one-time, twenty-dollar purchase of Facebook Credits using her credit card.
- Facebook stored Bohannon's credit card information without her knowledge.
- Subsequently, I.B. made additional in-game purchases totaling several hundred dollars, believing he was using virtual currency, not charging his mother's credit card.
- Upon discovering the charges, Bohannon contacted Facebook for a refund but received no response.
- In a separate incident, another minor, J.W., took his parents' (Julie and Steven Wright) debit card without their permission and made over one thousand dollars worth of charges for Facebook Credits.
- After discovering the charges, Steven Wright contacted Facebook and received a partial refund of $59.90 but was denied a full refund for the remaining $999.30 on the grounds that more than 90 days had passed since the transactions.
Procedural Posture:
- Plaintiff Glynnis Bohannon, on behalf of herself and her minor child I.B., filed a lawsuit against Facebook, Inc. in the Superior Court for the County of Santa Clara, a state trial court.
- Plaintiffs amended their complaint to assert class-wide claims.
- Defendant Facebook removed the putative class action to the U.S. District Court for the Northern District of California, a federal trial court.
- Plaintiffs filed a Second Amended Complaint (2AC) asserting various claims, including a request for declaratory judgment on the right of minors to disaffirm contracts.
- Defendant Facebook filed a motion to dismiss the Second Amended Complaint for failure to state a claim and a motion to strike the class allegations.
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Issue:
Under California law, may a minor disaffirm a contract for the purchase of virtual currency, even after that currency has been consumed, and recover the funds used for the purchase when those funds were paid by a parent without authorization?
Opinions:
Majority - Wilken, District Judge
Yes. A minor may disaffirm a contract for the purchase of virtual currency even after its consumption and recover the funds paid. The court held that California Family Code sections 6701(c) and 6710 provide minors with a broad right to void or voidable contracts to protect them from their own improvidence and lack of judgment. The court rejected Facebook's argument that a minor cannot disaffirm a contract after receiving its benefits, explaining that California law specifically allows disaffirmance without restoration of consideration. The court distinguished precedents involving attempts to disaffirm a single clause (like a forum selection clause) while continuing to enjoy the contract's benefits; here, the minors sought to disaffirm the entire purchase contract. Furthermore, the court found no authority to support Facebook's claim that a minor cannot recover consideration just because it was paid by a parent without their knowledge or consent, distinguishing cases where parents knowingly and contractually provided the consideration.
Analysis:
This decision is significant for its application of the traditional doctrine of infancy to the modern context of online transactions and intangible virtual goods. It reaffirms the strong public policy of protecting minors in contracts, placing the risk of loss squarely on adults and businesses that contract with them. The ruling signals to technology companies that they cannot easily evade long-standing consumer protection laws for minors, even in the digital marketplace. This precedent strengthens the legal position of minors seeking to void online purchases and may compel companies to implement more robust age and payment verification systems to mitigate financial risk.
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