Newly publicised documents have shown that Facebook allegedly chose not to act to stop children spending large amounts of money on in-app payments or microtransactions without permission from their caregivers.
In a three-month period between 2010 and 2011, more than 9% of money made from children through online games was recovered by credit card companies. 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. 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.
Campaigning US journalism outfit Reveal News secured a number of exhibits from an ongoing class-action lawsuit against Facebook in which the startling revelations came to light. Facebook employees also reportedly used the term "friendly fraud" to refer to purchases made by children without their parents' permission.
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. This is because, as one Facebook employee said, unlike refunds "virtual goods bear no cost". The suit alleges the social media giant made it hard for parents to get their money back.
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The documents also disclosed that some Facebook employees had proposed requiring minors and people over 90 years old to provide the first six digits of the credit card accounts before allowing purchase as a way to reduce unauthorised spending. The company was concerned with the influx of refund demands as chargeback rates for games on Facebook went as high as nine percent - well beyond what is considered a "red flag" by the Federal Trade Commission. But the link was frequently unclear to parents and children.
To parents who complained about surprisingly huge credit-card bills after their children built up big game expenses, Facebook had this to say, in so many words: "Forget it".
After the lawsuit was settled, Facebook changed its terms and established an internal queue for in-app purchases made by US minors.
The investigation was prompted by Finnish game developer Rovio. In a statement, Facebook said, "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".