Memos: Facebook allowed 'friendly fraud' to profit off kids

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

Facebook accused of tricking children into spending thousands playing online games

Newly released documents show that social media giant Facebook was aware that children were spending large amounts of money on the site's games without their parents' consent.

Internally, the company described the problem as one of "friendly fraud", and one staff member, who was in charge of a project to increase the company's game revenues, said it was particularly bad with a few games, including "PetVille, Happy Aquarium, Wild Ones, Barn Buddy and any Ninja game".

While Facebook did not develop the games in question, payments were made through its system which, at the time, did not have additional measures in place that required parents to re-verify card use if a child was spending more money.

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".

Even as the company employees suggested some ways to not bamboozle kids, Facebook clearly ignored these.

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Documents related to the case were placed under seal because Facebook successfully argued that releasing them to the public could harm its business. In the worst case, one boy, who was reportedly 12-years-old at the time, spent $610.40 on "Ninja Saga" before his mother's credit card company flagged up the odd activity. The documents also show that Facebook typically refused refund requests when it received them from cardholders, according to the report.

The 135 company documents include an internal analysis by Facebook that found that children spent $3.6 million (£2.7 million) on games between October 2010 and January 2011. She also said it would "make sense to start refunding for blatant FF-minor".

None of the unsealed records, however, directly tie Facebook's tolerance of "friendly fraud" to concerns about its slumping stock price during parts of 2012 and 2013.

One company memo even states: "Friendly Fraud - what it is, why it's challenging, and why you shouldn't block it".

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". However, Facebook had stored the credit card information without Bhannan's son's knowledge and had charged it as he played the game. The class action case was settled by Facebook in 2016, agreeing "to dedicate an internal queue to refund requests for in-app purchases". Facebook works with parents and experts to offer tools for families navigating Facebook and the web. In 2016, this lead to an update to the social network's terms and conditions that would provide "dedicated resources for refund requests relation to purchases made by minors on Facebook".

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