‘Friendly Fraud:’ Facebook Reportedly Ignored Solutions to Children Mistakenly Overspending in Games

Facebook employees reportedly recognized that children were running up massive tabs spending money on games but opted not to give refunds.

According to a new report from Reveal, internal Facebook documents released as part of a class action lawsuit reveal that the company made millions of dollars from children playing Facebook games and spending their parents’ money, but did little to fix the problem.

135 pages of unsealed documents were made public as part of a class action lawsuit against Facebook. The allegations are pretty straight forward; the company refused to give back money that kids spent, unknowingly, on games played through Facebook — and it wasn’t a mistake.

The documents reportedly show how Facebook targeted children in order to grow its games business, denied refund requests, and encouraged developers to let children spent money without parents’ permission — something the company referred to as “friendly fraud.”

Dated between 2010 and 2014, a mix of internal memos, employee emails, and more show Facebook recognized the issue of kids overspending in browser games, came up with solutions, but then opted against using them.

“A team of Facebook employees even developed a method that would have reduced the problem of children being hoodwinked into spending money, but the company did not implement it, and instead told game developers that the social media giant was focused on maximizing revenues,” reads the report.

In fact, Facebook’s explicit policy, as communicated to developers in an internal memo, was to tackle such complaints by handing out free virtual items, not by refunding the charges — because “virtual goods bear no cost.”

In a separate discussion, staff discussed a particular “whale” account, a term describing a high-spending customer. The account had spent more than $6,000 USD on in-app purchases and was deduced by staff to be underage. In conversation with another colleague about a purchase dispute regarding a minor, one Facebook employee suggested: “I wouldn’t refund.”

In a statement released on Friday, a Facebook spokesperson said: “We were contacted by the Center for Investigative Reporting last year, 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.”

“We have now released additional documents as instructed by the court,” the statement continues. “Facebook works with parents and experts to offer tools for families navigating Facebook and the web. As part of that work, we routinely examine our own practices, and in 2016 agreed to update our terms and provide dedicated resources for refund requests related to purchases made by minors on Facebook.”

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