Facebook Engages in “Friendly Fraud” of Children Playing Online Games

by Vins
Facebook

In January 2019, the Center for Investigative Journalism’s Reveal reported that a US district court judge had required Facebook to release documents showing that it had targeted children to make online games, including Angry Birds, PetVille, and Ninja Saga, more profitable. One internal Facebook memo described the practice that encouraged children to spend large sums of money on gaming apps without parental consent, as “friendly fraud,” Reveal’s Nathan Halverson reported. The documents showed that when underage users clicked on “offers” that would give them in-game upgrades, such as extra lives or cosmetic items, a credit card previously linked with the user’s account would be automatically charged. It is estimated that between 2008 and 2014, users under the age of eighteen generated more than $34 million dollars in revenues for Facebook.

The documents made public by US District Court Judge Beth Freeman’s order span a time period of 2010 to 2014 and include 135 pages of internal Facebook memos, secret strategies, and employee emails. As Halverson reported, internal documents also show that, for years, the company “ignored warnings from its own employees that it was bamboozling children.”

Many popular “free-to-play” games, such as Fortnite, offer players options to purchase additional downloadable content to enhance game play. But Facebook’s “free” online games differ from Fortnite and others, which require players to confirm purchases multiple times before transactions are completed. In Facebook’s online games, players were asked if they wanted additional items, but not informed that they would have to pay for them or that a parent’s credit card would be charged.

After parents discovered how much their children had spent on games while using Facebook, many asked for refunds, which the company consistently denied. (One case documented in the company’s memos involved a 15-year-old who was charged $6,500 in about two weeks playing games on Facebook.) In 2011, Facebook employees seeking a way to cut down on refund requests considered requiring the player to re-enter  the first six digits of the credit card before an order would be processed. However, Facebook determined that requiring game developers to include this feature would cut down on revenues and the safeguard was never implemented.

As requests for refunds continued, Facebook suggested that developers offer virtual items, rather than refunds, to those who complained. Those who reported problems often confronted a confusing system filled with errors that one Facebook employee referred to as their own “Frankenstein beast.”

In 2012, the mother of a 12-year-old who had run up nearly $1,000 dollars in charges over the course of one day filed a lawsuit against Facebook, after her efforts to dispute the charges and receive a refund had failed. She lost the lawsuit.

Around the same time, a young girl who had requested that $6,545 in charges be refunded was turned away by two employees whose conversation was included in the released files. In 2014, a class action lawsuit was opened against Facebook by the previously mentioned mother and many other families who had been affected by the “Friendly Fraud” policies. After fighting to seal most documents involved in the case, Facebook agreed to settle the case in 2016. They also agreed “to dedicate an internal queue to refund requests for in-app purchases made by U.S. minors.”

As of January 31, 2019, the only major news outlets to report on this story were CBS News and Forbes. Even then, CBS didn’t include anything about the solution offered by the internal Facebook team in 2011 that would’ve made it harder for underage users to make these purchases.

Source: Nathan Halverson, “Facebook Knowingly Duped Game-Playing Kids and Their Parents out of Money,” Reveal (Center for Investigative Reporting), January 26, 2019, www.revealnews.org/article/facebook-knowingly-duped-game-playing-kids-and-their-parents-out-of-money/.

Student Researcher: Matt Hehl (North Central College)

Faculty Evaluator: Steve Macek (North Central College)