Facebook Criticized Over Allowing "Friendly Fraud" On Games Platform

Credit: ShutterstockThe documents contain "internal Facebook memos, secret strategies and employee emails", per Reveal News, indicating that Facebook encouraged game developers to let children spend money without their parents' permission.

Games included in the report include Angry Birds, Wild Ones, Barn Buddy, Ninja Saga, Petville, and others. But the company didn't adopt them for fear of undercutting the revenue growth that helps boost the company's stock price - and its employees' compensation.

In an internal analysis, Facebook found that from October 2010 to January 2011 children spent $3.6 million on games, according to the report. Facebook employees also reportedly used the term "friendly fraud" to refer to purchases made by children without their parents' permission.

"The difficulty with friendly fraud is that we do not have a clear way to identify it at a purchase level because it looks like a good transaction", an employee wrote, adding that building "risk models" to reduce such cases "would most likely block good TPV [total purchase value]". One document shows the social networking company knew the average age of Angry Birds players was just five years old.

The court documents, which date from 2010 to 2014, were unsealed following a request from Reveal, a website run by the US-based Center for Investigative Reporting.

After a series of scandals, Facebook is under fire again over newly released documents that show an apparent pattern of exploiting minors for their parents' money. Another employee mentioned that only 50 percent of Facebook users were receiving email receipts. But the link was frequently unclear to parents and children.

One of the documents outlines a term called "Friendly Fraud", which describes the practice of children spending money on games without their parents' consent. However, the woman soon saw charges totaling nearly $1,000. Facebook said it released documents after being instructed by the court, having already voluntarily unsealed documents following a request from the Center for Investigative Reporting.

Under the settlement, refunds were issued for purchases minors made between 2008 and 2015. Facebook works with parents and experts to offer tools for families navigating Facebook and the web. The class action case was settled by Facebook in 2016, agreeing "to dedicate an internal queue to refund requests for in-app purchases".

In a statement released on Friday, a Facebook spokesperson said: "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".

  • Eleanor Harrison