Published: Sun, January 27, 2019
Markets | By Otis Pena

Facebook let kids run up huge bills to boost revenues

Facebook let kids run up huge bills to boost revenues

The social media giant targeted kids in an aggressive effort to pump up revenue from games like Angry Birds, PetVille and Ninja Saga, Reveal reported Thursday, citing court documents from a 2012 class action lawsuit.

Instances of children spending parents' money on games without their permission was labeled "friendly fraud" or "FF" in Facebook's internal correspondence.

Through surveys, Facebook reportedly learned that children were not aware they were spending "real" money.

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.

Glynnis Bohannan let her 12-year-old son use her credit card to play the game Ninja Saga on Facebook, but the initial fee of $19.95 mushroomed into charges totaling almost $1,000.

In one document, Rovio, the makers of popular mobile game Angry Birds, asked Facebook in 2012 why their users' credit card chargeback rate was so high. But the documents say Facebook didn't adopt them for fear of undercutting revenue.

The documents also disclosed that some Facebook employees had proposed requiring minors and people over 90 years old to provide the first six digits of the credit card accounts before allowing purchase as a way to reduce unauthorized spending.

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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.

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".

Facebook knowingly made millions of pounds from children as young as five using their parents' credit cards, referring to the transactions as "friendly fraud", according to court papers.

The documents include internal discussions between employees debating whether or not they should provide a refund (chargeback) in cases where it was abundantly clear that a child had used their parents' payment information without their permission. The fees added up for weeks until the mother noticed and requested a refund from Facebook.

One company memo even states: "Friendly Fraud - what it is, why it's challenging, and why you shouldn't block it". Bohannon was frustrated by her inability to get Facebook to refund her money and was quickly joined in the lawsuit by other parents.

"We have now released additional documents as instructed by the court", a company spokesperson wrote in an emailed statement. At the most recent oversight hearing of the US Federal Trade Commission by the Senate Commerce Subcommittee on Consumer Protection, several senators expressed particular interest in making sure the agency is taking measures to protect kids from predatory online activity.

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