It has been revealed that Facebook harboured concerns that child users were spending large sums of cash on in-app services without the knowledge of their parents, but were reluctant to take action.
According to a trove of documents obtained by the Center for Investigative Reporting (CIR), Facebook was well aware that children using its services were using credit cards — usually their parents' — to make purchases related to games and other apps, but made an executive decision not to enact safeguards.
We just received a trove of internal Facebook documents.— Reveal (@reveal) 25 January 2019
They show the company orchestrated a multi-year effort that duped children who played video games into spending their parents' money.https://t.co/E2yIciB5nA
CIR's report opens by saying that "Facebook orchestrated a multi-year effort that duped children and their parents out of money," adding that in some instances the haul of cash made by the increasingly disreputable social media giant amounted to "hundreds or even thousands of dollars." They also say that Facebook specifically "targeted children" to increase "revenue for online games."
Allegedly, through this shady practice, the company amassed a whopping $34 million between February 2008 and June 2014 from the accounts of children in the United States alone.
The catch of documents — which CIR says it obtained after Facebook was ordered to declassify them last week by a judge in the US — number at more than 135 pages, and include dubious secret strategies on how to target the wallets of unsuspecting parents through minors.
Facebook ignored solution to children overspending in games https://t.co/WmtkZYxoK0— Rosana Margarida (@RoseCG) 25 January 2019
More specifically, Mark Zuckerberg's multibillion dollar organisation reportedly encouraged its game developers to make it easier for child-users to spend cash without their parents' permission — a tactic that it ominously dubbed as 'friendly fraud.' CIR says that oftentimes children has no idea they were spending real money, and that Facebook's employees were aware of this. Allegedly, one employee, named in the documents as Tara Stewart, who is said to work as a risk analyst for Facebook, noted that in-game currency "doesn't necessarily look like real money to a minor," thus making it easier to spend.
Investigators decided to take a closer look at Facebook's practices after a Finish game developer called 'Rovio' apparently flagged up what CIR's report describes as "alarmingly high refund rates" from in-game purchases. It is suspected that these came after parents noticed a child had used their credit card on Facebook.
In relation to the hugely successful Facebook game ‘Angry Birds,' a memo included in the documents obtained by CIR written by Facebook employee Danny Stein noted how, "in nearly all cases the parents knew their children was playing Angry Birds, but didn't think the child would be allowed to buy anything without their password or authorisation first."
He allegedly went on to say that there would be ways for the company to block children making payments from unsuspecting parents' credit cards, but that this "would most likely block good total payment volume," suggesting that the company was more interested in racking up the profits rather than ensuring children were protected from unwittingly spending their parents hard-earned cash.
Between 2008 and 2014, Facebook did not have measures in place that required parents to verify credit card details, meaning that the child-users had free rein to spend. While Facebook does not develop games such as Angry Birds, the BBC reports that it takes 30% of the profits while the rest is kicked to the game developers.
How Facebook makes money off children — Unsealed courts docs will tell of repeated in-app purchases made by kids with no authorization by parents. Facebook fought refunds, and the evidence is going public https://t.co/BLF4rjEjnK #Facebook #Children #Games #InAppPurchases pic.twitter.com/XuiUGIX1MC— Bob Carver (@BobCarverTC) 22 January 2019
CIR reports that while internal memos it obtained show that some within Facebook suggested the implementation of age restrictions on transactions worth over $75, the company never implemented any such initiatives.
Eventually however, Facebook was forced to do so. In 2016 it was taken to court by the families of two children who had spent gargantuan loads of money on games. In the worst case, one boy, who was reportedly 12-years-old at the time, spent $610.40 on ‘Ninja Saga' before his mother's credit card company flagged up the strange activity. The BBC quotes the boy's mother as saying that, "he thought it was within the game. He had no understanding that every time he clicked it, it was going to go on my credit card." Facebook subsequently changed its policy and now offers refunds to purchases made by children.
Reveal has obtained internal Facebook documents showing how the company refused to help children who racked up thousands of dollars in charges playing games on the social network: https://t.co/UmM5a6MX4X pic.twitter.com/EL28PIckBW— Rob Price (@robaeprice) 17 January 2019