Facebook reportedly allowed developers to obscure real-money transactions, while profiting millions from minors who made purchases without permission from their parents.
"In almost all cases the parents knew their child was playing Angry Birds, but didn't think the child would be allowed to buy anything without their password or authorisation first", read one memo, written by Facebook employee Danny Stein. 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 odd activity. When she discovered the charges and asked her son about them, he showed her that the stack of in-game currency would blink when it depleted, and he would click to make the coins replenish-all without any indication that it was charging real money.
The report goes on to say that Facebook knew that many of these children didn't know they were making purchases, but continued to offer the products anyway, even after developers came up with a fix. In 2011, Facebook execs noticed its "friendly fraud" problem due to the amount of charge-backs game developers on its platform were reporting.
When the entire cache of documents is made public, it will likely show how much Facebook policies on the problem have changed since the lawsuit, according to reports.
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The catch of documents - which CIR says it obtained after Facebook was ordered to declassify them last week by a judge in the USA - number at more than 135 pages, and include dubious secret strategies on how to target the wallets of unsuspecting parents through minors.
According to an investigation by Reveal, the social network orchestrated a multiyear effort that duped children and their parents out of money and often refused to refund the money.
The lawsuit, filed in San Jose, California, centred on allegations that Facebook knowingly milked teenagers by permitting them to spend hundreds of dollars buying additional features on games such as Angry Birds and Barn Buddy without their parents' consent.
A 1 percent "chargeback" rate is considered high, Reveal News reported, and the Federal Trade Commission considers a 2 percent chargeback rate a "red flag" for deceptive business practices. These cash payments are meant to look like items within the game, and its easy for a child to not realize what they're doing.
The lawsuit that led to the release of the documents was eventually settled in 2016, when Facebook agreed "to dedicate an internal queue to refund requests for in-app purchases made by United States minors". In 2016, Facebook chose to settle the case, paying two families $US5000 ($7044) and agreeing to change its practices. It agreed to update its terms "and provide dedicated resources for refund requests related to purchases made by minors on Facebook".