Does a settlement with the Federal Trade Commission that provides consumer restitution foreclose recovery in a class action suit based on identical allegations?
According to Google, the answer is yes.
Last year, the FTC charged Google with committing unfair commercial practices within the meaning of the Federal Trade Commission Act by billing consumers for Google Play store-app purchases made by children without the authorization of the account holder. Apps downloaded from the store did not require the entry of a password to make in-app purchases.
Google changed its policy in 2012 to require a password for such purchases but created a 30-minute window during which purchases could be made without a password. Over the last three years, “many thousands” of consumers complained to Google about the unauthorized charges incurred by children making in-app purchases, some reaching hundreds of dollars, the FTC said. The company failed to take appropriate action by typically referring customers to the app developer and internally referring to the issue as “family fraud.”
To settle the allegations, Google agreed to pay $19 million in customer restitution.
Prior to the consent agreement, Google faced a putative class action filed in California federal court by a mother who claimed the company’s lax policy for in-app purchases cost her $65.95 when her sons bought items in the Run Jump Smash app.
In a joint status report filed with the court after the FTC settlement was finalized, Google argued that the civil suit should be dismissed, because the agreement requires that Google reimburse all wrongly billed customers who now have no additional basis for recovery.
“The FTC Settlement resolved allegations that parallel the plaintiffs’ allegations in this matter and provides that Google will grant to consumers all of the relief to which plaintiffs would be entitled if they were successful in this litigation – i.e., full refunds to consumers for minors’ unauthorized in-app purchases,” Google told the court. “In light of the FTC Settlement, Google submits that the plaintiffs in this case will obtain all of the relief to which they would otherwise be entitled and, therefore, there is no basis for this class action to proceed.”
The plaintiff refused to drop the suit, and Google stated it will file a motion to deny certification of the proposed class.
In response, the plaintiffs “strongly disagree[d]” with Google’s contention and indicated the parties “are now at an impasse.” It requested that the court order discovery to commence immediately.
To read the parties’ joint status report in Imber-Gluck v. Google, click here.
Why it matters: Google’s situation is not uncommon, as plaintiffs are often quick to file a civil lawsuit in the wake of an FTC enforcement action. Companies should keep an eye on the proceedings to see whether Google is successful in getting the consumer class action dismissed.