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Facebook let kids run up huge bills to boost revenues

28 January, 2019, 06:13 | Author: Sara Gill
  • Facebook used games to make millions off children in 'friendly fraud'

"We were contacted by the Center for Investigative Reporting previous year, and we voluntarily unsealed documents related to a 2012 case about our refund policies for in-app purchases that parents believe were made in error by their minor children". In many cases, over-spending by minors was the result of either children not realizing they were spending real money by purchasing in-game goodies and currency, or parents not knowing that their credit card information had been stored in the games that their kids are playing. It was known at Facebook as "friendly fraud", meaning a minor was using the app on a parent's or grandparent's account.

"In almost all cases the parents knew their child was playing Angry Birds, but didn't think the child would be allowed to buy anything without their password or authorisation first", read one memo, written by Facebook employee Danny Stein.

The files show discussions between Facebook employees about how in-app payments were occurring within the platform, and whether children might be unwittingly spending real money during games. Employees suggested giving money back, but leaders did not respond to those suggestions.

One teenager reportedly spent $6,500 over about two weeks of Facebook gaming and the company allegedly denied refunds in cases like this.

The report goes on to say that Facebook knew that many of these children didn't know they were making purchases, but continued to offer the products anyway, even after developers came up with a fix.

The multi-year effort was detailed in a class action lawsuit revealing Facebook's alleged attempts to increase revenue for games like Angry Birds and PetVille.

To parents who complained about surprisingly huge credit-card bills after their children built up big game expenses, Facebook had this to say, in so many words: "Forget it".

Between 2008 and 2014, Facebook did not have measures in place that required parents to verify credit card details, meaning that the child-users had free rein to spend.

A 1 percent "chargeback" rate is considered high, Reveal News reported, and the Federal Trade Commission considers a 2 percent chargeback rate a "red flag" for deceptive business practices.

A full overview of the particularly troubling bits of what was released can be found over on Reveal's website, including links to the released documents and snippets of conversations between Facebook and the developers of the games in question.

As part of the settlement of the 2016 case, Facebook said it works with parents and experts to provide tools for families. With that settlement, Facebook agreed "to dedicate an internal queue to refund requests for in-app purchases made by USA minors".



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