Court documents detailing how Facebook allowed and encouraged mobile games on its platform to take advantage of children will be made public, a federal judge ruled this month. The more than 135 pages of documents pertain to a class action lawsuit that was filed in California in 2012 and settled in 2016, resulting in refunds for purchases made by minors between 2008 and 2015.
That Facebook and other platforms were allowing kids to make unapproved purchases was public information for many years, but just how intentional Facebook was about encouraging this spending was unclear until now.
Reveal News, part of the Center for Investigative Reporting, requested the documents — which include memos, employee emails, and internal strategy documents from 2010 to 2014 — and was permitted to see excerpts, of which it published a summary on Thursday. They detail children spending hundreds or even thousands of dollars in popular games like PetVille, Barn Buddy, Angry Birds, and Fruit Ninja, using their parents’ credit cards.
When Facebook received refund requests from the cardholders, it typically refused them. And when employees raised concerns about what they considered a correctable problem, they were ignored. Other employees exchanged emails in which they referred to high-spending children as “whales,” a casino term that refers to gamblers who throw around enormous amounts of cash.
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Here are the highlights from Reveal’s report:
- Facebook employees used the term “friendly fraud” to refer to purchases made by children without their parents’ knowledge, and told game developers that allowing it would be a good idea — to maximize revenue.
- In its own surveys, Facebook learned that children didn’t understand that they were spending real money, or that their parents’ credit cards were in any way attached to the games.
- A small group of Facebook employees came up with a way to reduce the problem — by having users reinput the first six digits of their credit card to make in-game purchases — but the company squashed it. (To maximize revenue.)
- An internal analysis of purchases from October 2010 to January 2011 found that children spent $3.6 million on games. But more than 9 percent of that revenue had to be pulled back by the credit card companies themselves after Facebook denied direct refunds. (The Reveal report notes that a 1 percent chargeback rate is considered high by most standards, and that the FTC has referred to a 2 percent chargeback rate as a “red flag” for a “deceptive business.”)
- Even knowing all of this, Facebook suggested to game developers that refund requests be met with free virtual goods instead of money.
When the lawsuit was settled, Facebook also updated its terms and agreed “to dedicate an internal queue to refund requests for in-app purchases made by US minors.” When the rest of the documents are made public, it may be easier to see just how many of Facebook’s policies and strategies around this issue have actually changed. Either way, it’s likely that the next week will bring more reports about the internal bickering at Facebook over whether to swindle children.
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Sourse: vox.com
