Memos: Facebook allowed ‘friendly fraud’ to profit from kids

Emagist Entertainment Limited

Emagist Entertainment Limited "Nina Saga is one of the Facebook games mentioned in the class action suit

"And the company often denied attempts by parents to recover hundreds or even thousands of dollars until credit card companies "clawed back" the money from Facebook", the VentureBeat reported late on Saturday.

CBS News reports that just-released documents from a 2012 lawsuit show that Facebook was aware of the problem of kids making purchases through its games and apps without their parents' consent.

One Facebook employee, Danny Stein, wrote: "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".

In one such case, two employees discuss charges amounting to $US6545 ($9221), and acknowledge that the child claims to be 15 years old but looks younger.

News of the company's stance comes from internal documents used in the class action lawsuit. The records also show that the tech giant rejected recommendations to tackle what it described as "friendly fraud". The suit alleges the social media giant made it hard for parents to get their money back.

It has been revealed that Facebook harboured concerns that child users were spending large sums of cash on in-app services without the knowledge of their parents, but were reluctant to take action.

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Breanna Hathaway , who identified herself as Casey's aunt, said the boy told the family he was with a bear for two days. Even trained searchers were experiencing difficulties. "Additional search assets will return in the morning".

Another exhibit showed a Facebook employee querying why "most of these games with FF-minor problems" were "defaulting to the highest-cost setting in the purchase flows".

One risk analyst at the company, Tara Stewart, said that in-game currency "doesn't necessarily look like real money to a minor".

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". The document does not make clear whether Facebook ever enacted this program.

After the lawsuit was settled, Facebook changed its terms and established an internal queue for in-app purchases made by USA minors.

It added: "As part of that work, we routinely examine our own practices, and in 2016 agreed to update our terms and provide dedicated resources for refund requests related to purchases made by minors on Facebook". Bohannon was frustrated by her inability to get Facebook to refund her money and was quickly joined in the lawsuit by other parents.

It's a troubling affair, but one that game developers should pay close attention to as the conversation about ethical monetization, especially when children are involved, isn't likely to wind down at any point in the future. Facebook changed its refund policy around games in 2016 and now has a detailed site about how to handle payment disputes with developers.

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