## Facts

- Two minors, I.B. and J.W., sued Facebook in a putative class action through their parents/guardians, alleging improper retention of money spent through Facebook Credits.
- Facebook operated a virtual-currency system (Facebook Credits) used for in-game purchases on its platform and allowed minors to register and make such purchases.
- I.B.’s mother permitted a one-time $20 purchase of credits using her credit card, which Facebook stored; I.B. later made additional in-game purchases resulting in several hundred dollars in charges to the stored card.
- J.W. used his parents’ debit card without permission to purchase credits through approximately twenty transactions totaling over $1,000.
- The parents sought refunds; Facebook allegedly refused, citing an “all sales are final” or nonrefundable policy.
- Plaintiffs alleged the transactions were void or voidable under California minor-contract protections and that Facebook’s refusal to refund was unlawful and unfair.

## Issues

1. Whether minors plausibly alleged the credit-purchase contracts were void under California Family Code § 6701(c) as relating to personal property not in the minors’ immediate possession or control.
2. Whether minors plausibly could disaffirm the contracts under California Family Code § 6710 and obtain restitution despite having received in-game benefits.
3. Whether Facebook’s alleged no-refund policy and retention of funds stated a claim under California’s Unfair Competition Law (UCL).
4. Whether plaintiffs adequately stated claims under the Consumers Legal Remedies Act (CLRA) and the Electronic Fund Transfer Act (EFTA).

## Decision

- The court granted in part and denied in part Facebook’s Rule 12(b)(6) motion to dismiss.
- The court allowed claims premised on minors’ ability to void or disaffirm the transactions under California Family Code §§ 6701 and 6710 to proceed at the pleading stage.
- The court rejected Facebook’s argument that receipt of in-game benefits categorically barred disaffirmance where plaintiffs sought to unwind the transactions as a whole.
- The court held the allegations were sufficient to proceed on UCL theories tied to the asserted void/voidable transactions and requested restitution.
- The court dismissed certain CLRA theories as inadequately pleaded or requiring further factual development, with limited leave to amend.
- The court dismissed EFTA theories because plaintiffs did not plausibly allege Facebook was a proper defendant under the statute’s framework.

## Legal Principles

- Under California Family Code § 6701(c), a minor’s contract relating to personal property not in the minor’s immediate possession or control may be void; at the pleading stage, allegations that payment funds were outside the minor’s possession or control can suffice.
- Under California Family Code § 6710, a minor may disaffirm a contract before reaching majority or within a reasonable time thereafter; disaffirmance may permit unwinding the transaction and seeking restitution.
- A minor’s receipt of benefits does not, by itself, bar disaffirmance when the minor seeks to disaffirm the entire agreement rather than selectively avoiding unfavorable terms.
- UCL claims may proceed where a plaintiff plausibly alleges an underlying unlawful practice (e.g., retention of funds from void or disaffirmed transactions) and a substantial, non-avoidable injury supporting an “unfair” theory.
- EFTA claims generally target duties within the consumer–financial-institution relationship; absent plausible allegations fitting that framework, claims against a platform facilitating purchases may be dismissed.

## Conclusion

The court permitted minors’ California-law theories to proceed that sought to void or disaffirm Facebook Credits purchase transactions and obtain restitution, and it allowed related UCL claims based on Facebook’s alleged refusal to refund; it dismissed certain CLRA theories and rejected EFTA claims as inadequately pleaded or inapplicable to Facebook’s role.


I.B. v. Facebook, Inc., 905 F. Supp. 2d 989 (N.D. Cal. 2012)