Memos: Facebook allowed 'friendly fraud' to profit off kids

Facebook used games to make millions off children in 'friendly fraud'

Facebook used games to make millions off children in 'friendly fraud'

The outlet obtained the information through 135 pages of documents from a class action lawsuit filed in California in 2012 and settled in 2016. An internal study showed that children spent $3.6 million (£2.75 million) on Facebook browser games in just four months between October 2010 and January 2011. In some cases, Facebook employees appeared to be aware children were spending money without realising it.

According to the documents, this was a common practice across the site, known as "friendly fraud".

The documents, which include internal company memos, were released late Thursday as a result of legal action by the Center for Investigative Reporting's Reveal publication. They also didn't understand that their parents' credit cards were linked to the games, Reveal reported.

In one instance, a 15-year-old racked up $6,545 in charges after playing a game for two weeks but no refund was awarded.

New findings suggest Facebook put together an organized effort over multiple years to deceive children and parents out of money while playing online, according to newly unsealed court documents. But the documents say Facebook didn't adopt them for fear of undercutting revenue. Despite its recognition of the problem, internal discussions show that Facebook decided it would be best to fight refund requests and allow the problem to persist. Her charges ballooned to almost $1000 total.

Under the settlement, refunds were issued for purchases minors made between 2008 and 2015.

Rovio, the makers of Angry Birds, also noticed that refund requests from Facebook purchases were unusually high and wrote to Facebook expressing concerns. Another employee mentioned that only 50 percent of Facebook users were receiving email receipts. The company eventually settled the case with the family.

Facebook reportedly allowed developers to obscure real-money transactions, while profiting millions from minors who made purchases without permission from their parents. They said that building in a way to prevent the issue would harm revenue, but Facebook could give Rovio special attention for monitoring transactions.

"We have now released additional documents as instructed by the court", a Facebook spokesperson said, in a statement emailed to Fox News. In 2016, this lead to an update to the social network's terms and conditions that would provide "dedicated resources for refund requests relation to purchases made by minors on Facebook". At the most recent oversight hearing of the US Federal Trade Commission by the Senate Commerce Subcommittee on Consumer Protection, several senators expressed particular interest in making sure the agency is taking measures to protect kids from predatory online activity.

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