Facebook Knowingly Let Minors Spend Parents' Money Without Consent

Virginia Carson
January 28, 2019

Newly released court documents reveal that Facebook allowed children to ring up huge bills on digital games while the company rejected recommendations on addressing what it dubbed "friendly fraud". In 2012, an Arizona woman sued the tech giant after her 12-year-old son racked up around $1,000 in credit card charges while playing Ninja Saga. But the company didn't adopt them for fear of undercutting the revenue growth that helps boost the company's stock price - and its employees' compensation. They were part of a lawsuit centered on allegations that Facebook knowingly gouged teenagers by permitting them to spend hundreds of dollars buying additional features on games such as "Angry Birds" and "Barn Buddy". It is called "friendly fraud". "The documents come from 2010-2014 and demonstrate that Facebook was well aware of kids were playing simple games like Angry Birds and purchasing virtual items without their parents' knowledge".

"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".

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

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He allegedly went on to say that there would be ways for the company to block children making payments from unsuspecting parents' credit cards, but that this "would most likely block good total payment volume", suggesting that the company was more interested in racking up the profits rather than ensuring children were protected from unwittingly spending their parents hard-earned cash. "Friendly fraud", according to the company.

The hidden game purchases have seen chargebacks at a rate of nine percent, which is more than four times higher than the Federal Trade Commission's two percent threshold for "deceptive" business practices. The child is referred to as a "whale", a term used to indicate a user who is a big spender.

The investigation was prompted by Finnish game developer Rovio.

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Engadget reached out to Facebook for comment regarding Reveal's reporting and will update this story if we hear back.

Facebook considered changing its system so that users under 17 (and over 90) who tried to make transactions worth over $75 would have to enter the first six digits of the payment card on file, in order to prove they were in possession of it, or could at least remember it. "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".

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