Facebook’s public relations problems continue to plague them into 2019. New reports show that executives at the social media giant had a pretty cavalier attitude toward children spending their parents’ hard-earned money on Facebook games.
Documents stemming from a lawsuit indicate that Facebook knew full well that much of its gaming revenue was from “friendly fraud,” the practice that led to kids unwittingly burning through cash on the platform.
Report: Facebook shrugs at ‘friendly fraud’ charges for children’s games
In the 2012 incident that sparked the legal action, the plaintiff’s son spent $1,000 in one day because he didn’t know that Facebook stored his mother’s credit card nor that it was charging him every time he added new features in his game, according to TheNextWeb.com.
Now, documents made public by the Reveal, a website dedicated to investigative journalism, show that while Facebook’s rank-and-file employees were queasy about enforcing the charges, company higher-ups held no such reservations.
The report says Facebook also made a practice of not refunding the money for disputed game charges, including in the case of a 13-year-old girl who racked up a bill of more than $6,000.
Profits over parents: Facebook doubled down on ‘friendly fraud’
The internal memos show that when Facebook employees came up with a protection to stop unsuspecting children from being charged for playing the games, execs never instituted it. Instead, these kids came to be called “whales,” a term used in the casino industry for high rollers who have been successfully lured into continuous spending.
Here’s an excerpt from Reveal’s article, based 130+ documents they obtained:
The revenue Facebook earned off children had such large chargeback rates – a process in which the credit card company is forced to step in and claw back money on behalf of parents – that it far exceeded what the Federal Trade Commission has said is a red flag for deceptive business practices.
Underscoring the company’s revenue-over-everything mentality, Facebook management even released an internal document titled, “Friendly Fraud – what it is, why it’s challenging, and why you shouldn’t try to block it,” according to the article.
Facebook, for its part, says it intends to release more documents related to its handling of in-app purchases in the near future.
Money expert Clark Howard has written quite a bit about Facebook and privacy. In his book Living Large in Lean Times he says parents must stay vigilant when it comes to protecting their loved ones on social media.
“While I don’t want to scare you away from the joys of being connected, I do want you to be smart about it and stay safe.”