Published: Mon, January 28, 2019
Money | By Bruce West

Facebook made millions by duping gamer kids | #94563

Facebook made millions by duping gamer kids | #94563

Sometimes, kids were unaware they were even spending real money, according to an internal report by Facebook itself.

Newly publicised documents have shown that Facebook allegedly chose not to act to stop children spending large amounts of money on in-app payments or microtransactions without permission from their caregivers.

And parents also did not know their children could use their credit card without re-entering a password or some other form of verification, according to the Reveal.

In a 2013 discussion between two of the company's employees, a 15-year-old Facebook user who had spent about USD6,500 playing games is described as a "whale" - a term that gambling casinos use to describe people who make them a lot of money.

Again, game developers on Facebook were seeing charge-back rates of up to 9%, and they reported this to Facebook, yet the company decided not to act, even after a Facebook employee devised a way for the company to easily block children from racking up charges via in-game purchases.

The lawsuit eventually grew into a class action, and the internal documents pertaining to the alleged "friendly fraud" practice cover the period between 2011 and 2014, according to the report. Facebook settled the lawsuit in 2016; a U.S. District Court judge ordered the documents unsealed on January 14.

It appears Facebook ignored warnings from its own employees that it was bamboozling children, Reveal reports.

The catch of documents - which CIR says it obtained after Facebook was ordered to declassify them last week by a judge in the USA - number at more than 135 pages, and include dubious secret strategies on how to target the wallets of unsuspecting parents through minors.

In some cases, the documents say, the social media giant refused to issue refunds to parents who found children had been spending their money.

It stemmed from high rates of what was referred to as "friendly fraud", or children spending money on games without consent from parents or guardians. One deposition shows Facebook employees were reluctant to reduce this "friendly fraud" because it would likely also reduce the company's overall revenue.

In fact, Facebook's explicit policy, as communicated to developers in an internal memo, was to tackle such complaints by handing out free virtual items, not by refunding the charges - because "virtual goods bear no cost".

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

"Facebook works with parents and experts to offer tools for families navigating Facebook and the web", the company said, adding that it agreed to provide "dedicated resources" to deal with chargebacks originating from purchases made by minors.

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