Kids, Cards, and Class Actions: The Xbox Live Lawsuit

Information Week is reporting about a class action lawsuit that resulted from a child using his parent’s debit card to register for Xbox Live without permission. The damages are from an overdraft fee a year later when the automatic renewal occurred. While I’m sure many class action attorneys love the idea of being able to take a shot at Microsoft, this case makes me want to roll my eyes because it highlights three major points of personal responsibility, one of which is a legal issue.

First, the two non-legal points: financial responsibility and parental responsibility. Financial responsibility in the US has been a major problem as of late, especially given the debt trends in the country. However, I would assume most people monitor their cash flow to some extent. Accordingly, I find it hard to believe that the parent in this case didn’t notice the original Xbox Live charge, and if he did, then it was irresponsible not to address the issue at that time and rather let it renew a year later. Second, the parent should be monitoring the child’s activity, and it is ultimately the parent’s fault the card was taken and used by the child. The parent should realize this at some point in the transaction before an entire year has elapsed.

This leaves the third issue, the concept of vicarious liability for the actions of your child, which I would consider a spin-off of parental responsibility. While this issue varies from state to state, many states do hold parents responsible for the actions of their children, be that vandalism or online piracy or, in this case, use of a parent’s credit card. Given that Microsoft already refunded the charge, the vicarious liability would be limited to the bank overdraft fee, which still stems from the original action of the child. I’m not sure of the vicarious liability laws in the state where this action is being brought, however.

Ultimately, holding a parent liable for $35 in damages caused by the unsupervised action of their child seems like a pretty minimal penalty, and I would hope that the parent would take it as a very inexpensive lesson that they need to keep a closer eye on their child and their wallet. Instead, it has been turned into a class action suit against Microsoft. I can’t predict the outcome of the case, but if it were entirely up to me, I would dismiss the suit without question.

[Via Joystiq]

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About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

4 Responses to Kids, Cards, and Class Actions: The Xbox Live Lawsuit

  1. TrojanGuy says:

    The avalanche of frivolous lawsuits that we’ve seen here in America has done a lot to shake my faith in our legal system, but for some reason I still am thinking (hoping) that this one is going to get tossed out of court in a heartbeat.

  2. Ryan says:

    to me this is one of the things wrong with usa.. you can get sued over anything…

  3. Nightwng2000 says:

    I don’t know of ANY company that refunds bank overdraft fees anyway.

    Microsoft did their part: they refunded what they charged.

    Maybe the guy should sue the bank instead:

    “They charged me, I didn’t want them to, they refunded the money, so you, the bank, should refund me also since, technically, the transaction never took place.”

    If Microsoft hadn’t refunded the money, MAYBE would have been a different story.

    Of course, from the way the story reads, daddy LET him sign up once, for a YEARLY SUBSCRIPTION. Duh!

    I agree with the dismissal request.

    NW2K Software

  4. Tom90deg says:

    True, this does seem to be mistargeted. MS didn’t charge him a overdraft fee, the bank did. Although I imagine he may of already tried getting it refunded from the bank, and failed, or he saw this as a wonderful chance to try to sue a huge company and get a large cash settlement. I do hate frivolous lawsuits.

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