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How Facebook Scammed Kids with 'Friendly Fraud' Games

Over the past year, Facebook's ethical violations have been numerous and widespread. But this week, newly released court documents have outlined even more victims of the social network's deception: young gamers, and their parents.

According to the documents, released Thursday in response to legal action from Reveal News, Facebook took advantage of its "freemium" games (think Farmville) to make large sums of money off young gamers.

Credit: Shutterstock

(Image credit: Shutterstock)

The 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.

"Friendly Fraud"

One of the documents outlines a term called "Friendly Fraud," which describes the practice of children spending money on games without their parents' consent. In an internal email, Facebook employee Elizabeth Williges stressed the need to tell game developers to not block "friendly fraud."

The memo said that developers should be encouraged to give virtual items instead of refunds for these cases (for example, an extra sword in Ninja Saga), noting that "virtual goods bear no cost."

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Another series of internal emails indicates that the company was at work on a "dispute" button that would automatically dispute chargebacks, noting that doing so manually would be "completely inefficient and not operationally cost effective." The document does not make clear whether Facebook ever enacted this program.

Yet another internal report shows that Facebook employee Tara Stewart actually suggested refunding some of these parents for friendly fraud. Her team experimented with solutions to curb kids' spending with parents' credit cards (including requiring children to re-enter partial card numbers). However, the solutions caused a decrease in Facebook's revenue, and the employees never fully implemented them as a result.

Users Didn't Know They Were Spending

It's clear from the released documents that Facebook intentionally structured its games and website to obfuscate how much kids and parents were spending.

Glynnis Bohannon told Reveal News that after she lent her 12-year-old son her credit card to spend $20 on Ninja Saga, the game stored her payment information and continuously charged the card as he played. Her charges ballooned to nearly $1000 total. Bohannon was unable to dispute the charges with Facebook; she filed a lawsuit, but was treated "terribly," her lawyer told Reveal.

A series of internal messages shows that it was very difficult for users to find receipts for their transactions. "If you are not logged into Facebook and click on 'View Receipt Online,' it directs you to a general page that doesn't have a clear path to dispute with us," the document reads. Another employee mentioned that only 50 percent of Facebook users were receiving email receipts.

Facebook issued the following statement to Tom's Guide: "We were contacted by the Center for Investigative Reporting last year, 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. We have now released additional documents as instructed by the court. Facebook works with parents and experts to offer tools for families navigating Facebook and the web. As part of that work, 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.”