Facebook Allowed 'Friendly Fraud' in Order to Profit From Children: Court Documents

Facebook Allowed 'Friendly Fraud' in Order to Profit From Children: Court Documents

After a series of scandals, Facebook is under fire again over newly released documents that show an apparent pattern of exploiting minors for their parents' money. However, the solutions caused a decrease in Facebook's revenue, and the employees never fully implemented them as a result.

RevealNews says this lawsuit was settled by Facebook in 2016. A federal judge ordered the documents, which are from 2010 to 2014, to be unsealed after a request from the publication. 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". They were also unaware their children were able to charge in-game purchases to them "with passwords or any other form of verification".

In one document, an employee at Facebook discussed how the company could use the "data to choose apps that would be good recipients for an automatic underage inflow ... apps that come to mind: PetVille, Happy Aquarium, Wild Ones, Barn Buddy and any Ninja game". One game developer reported to Facebook that a full 9% of the money it made from in-game purchases was being clawed back through charge-backs.

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've changed some of their practices but initially when they went into buying and selling things on Facebook, they didn't have proper, safe practices".

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"I think we all agree that it is really Important for Angry Birds to be a success story so if they are really concerned about the refund rate we can increase our focus on their transactions and our processes around them to try and lower their refund rate", they wrote.

The suit was filed by Glynnis Bohannan, whose 12-year-old son racked up nearly $1,000 playing Ninja Saga.

It's clear from the released documents that Facebook intentionally structured its games and website to obfuscate how much kids and parents were spending. In 2016, Facebook chose to settle the case, paying two families $US5000 ($7044) and agreeing to change its practices.

In a statement released on Friday, a Facebook spokesperson said: "We were contacted by the Center for Investigative Reporting a year ago, 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". "Facebook works with parents and experts to offer tools for families navigating Facebook", a spokesperson said. With that settlement, Facebook agreed "to dedicate an internal queue to refund requests for in-app purchases made by US minors".

Game developers also raised concerns.

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