Economy

Facebook willingly let kids spend their parents' money and didn't stop it

Facebook willingly let kids spend their parents' money and didn't stop it

According to Reveal from The Center for Investigative Reporting, court documents containing internal Facebook memos, strategies, and employee emails show that Facebook employees knowingly exploited the spending habits of children playing free-to-play games and, in some cases, refused to refund parents who became aware of their children's spending.

Facebook told Fox News that it was contacted by the Center for Investigative Reporting previous year and voluntarily unsealed documents related to a 2012 case about the company's refund policies for in-app purchases that parents believe were made in error by their minor children. Their own reports showed underage users did not realize their parent's credit cards were connected to their Facebook accounts and they were spending real money in the games, according to the unsealed documents.

RevealNews says this lawsuit was settled by Facebook in 2016.

Glynnis Bohannon told Reveal News that after she lent her 12-year-old son her credit card to spend $20 on Ninja Saga, the game stored her payment information and continuously charged the card as he played.

A full overview of the particularly troubling bits of what was released can be found over on Reveal's website, including links to the released documents and snippets of conversations between Facebook and the developers of the games in question. According to court documents, the company calculated that between 2008 and 2014 minors under 18 made purchases on Facebook totaling more than $34 million. In 2011, Facebook execs noticed its "friendly fraud" problem due to the amount of charge-backs game developers on its platform were reporting.

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Facebook issued the following statement to Tom's Guide: "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".

Despite this obvious solution, Facebook decided that it would harm revenue and elected to continue fighting refund requests for the foreseeable future, the documents show. With that settlement, Facebook agreed "to dedicate an internal queue to refund requests for in-app purchases made by US minors".

"We have now released additional documents as instructed by the court".

Facebook released the "friendly fraud" documents just as the Wall Street Journal was publishing an op-ed piece by Zuckerberg defending the company's integrity and business principles. "Facebook works with parents and experts to offer tools for families navigating Facebook", a spokesperson said. Bohannan filed a lawsuit after she could not reach Facebook for a refund. The average is around 0.5%, according to the Federal Trade Commission (FTC).