Facebook 'tricked' kids, parents to spend money on 'free' games

Facebook used games to make millions off children in 'friendly fraud'

Facebook used games to make millions off children in 'friendly fraud'

Facebook reportedly duped kids into spending their parents' money in online games.

Friendly fraud is an ecommerce term for customers who buy goods with a credit card and then tell their card issuer to make a chargeback, reversing the transaction.

The records reveal, for example, that one 15-year-old ran up charges of $6,545 while playing games on Facebook for just over two weeks.

Campaigning US journalism outfit Reveal News secured a number of exhibits from an ongoing class-action lawsuit against Facebook in which the startling revelations came to light. They were also unaware their children were able to charge in-game purchases to them "with passwords or any other form of verification".

New findings suggest Facebook put together an organized effort over multiple years to deceive children and parents out of money while playing online, according to newly unsealed court documents.

A team of Facebook employees even went so far as to develop a system that could have prevented children from unknowingly spending their parent's money, but the company chose never to implement it. Bohannan filed a lawsuit after she could not reach Facebook for a refund. The abbreviation "FF" stood for "Friendly Fraud", the term Facebook used to refer to these fraudulent purchases which were made without malicious intent. But this week, newly released court documents have outlined even more victims of the social network's deception: young gamers, and their parents. At one point, Rovio, the creator of the massive hit Angry Birds, emailed Facebook asking about the refund rates of "5-10 percent" for money spent on the game, which seemed "quite high".

After taking a look at the issue, a Facebook employee concluded that around 93 per cent "of the refunds are being made due to friendly fraud refund requests". They were hesitant to stop the practice because it would hurt the company's revenue.

The internal debate about how to address the recurring problem of kids spending big bucks behind their parents' backs occurred from 2010 and 2014 - a period that included Facebook's stock market debut in 2012.

"If we were to build risk models to reduce it, we would most likely block good [total purchase value]", said one Facebook employee in the unsealed documents. The class action case was settled by Facebook in 2016, agreeing "to dedicate an internal queue to refund requests for in-app purchases".

Yet, in a statement provided to the Center for Investigative Reporting, which reviewed its emails this week, Facebook noted that it "routinely" examines and revises the terms and practices with connection to refund requests. "Facebook works with parents and experts to offer tools for families navigating Facebook", a spokesperson said.

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