Zynga Wins 'Scamville' Lawsuit

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Handing Zynga a victory, a federal judge ruled that Web user Rebecca Swift could not pursue a class-action lawsuit against the gaming company because its terms of use required all disputes would be resolved in arbitration.

U.S. Magistrate Judge Elizabeth Laporte in the Northern District of California ruled that a recent Supreme Court decision required her to grant Zynga's motion to send the case to arbitration. The Supreme Court ruled in April that AT&T was entitled to enforce an arbitration agreement against consumers who had attempted to bring a class-action against the company. In that case, the consumers alleged that AT&T advertised discounted cell phones but charged tax on the full price.

At the time, observers said that the decision could severely curtail consumers' ability to bring class-action lawsuits. Laporte's ruling, issued this month, appears to bear out that prediction. Swift withdrew her claims against Zynga after Laporte sent the matter to arbitration.

Swift's dispute with Zynga dates to 2009, when she alleged that ads in games on Facebook tricked users by purporting to offer "free" trial subscriptions. She said that she lost around $200 as a result of misleading ads that appeared in "YoVille." She said that while playing "YoVille," she signed up for a "risk-free" trial of monthly shipments of a green tea supplement in order to earn YoCash -- virtual currency used in the game.

The in-game ads said that consumers could cancel within 15 days, but Swift alleged that the company refused to honor her request to cancel, resulting in $165 in charges to her debit card.

On another occasion, she entered her cell phone number in response to an ad for YoCash,which allegedly resulted in her being billed for about $30 without her consent.

Swift sued shortly after tech site TechCrunch posted a series of articles about the so-called "Scamville" ads, which ran in Zynga games like "MafiaWars," "FarmVille" and "YoVille." A video on TechCrunch featured Zynga CEO Mark Pincus admitting that he "did every horrible thing in the book" to grow revenues.

Although Laporte sent Swift's case against Zynga to arbitration, the judge allowed Swift to continue pursuing claims against Adknowledge and KITN Media, which do business under the name "Super Rewards" and allegedly worked with Zynga to develop the ads. Adknowledge and KITN filed an appeal of that ruling late last week.

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