Typically, if an accidental purchase happens from a minor, a company takes steps to ensure the refund is initiated. However, Facebook reportedly engaged in a ‘friendly fraud’ to allow children to spend thousands of dollars on games without their parents’ permission.
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 class-action lawsuit indicates how Facebook targeted children in an effort to expand revenue for online games, such as Angry Birds, PetVille, and Ninja Saga.
As part of this ‘friendly fraud’, Facebook allowed developers to let high-spending children, called ‘whales’, spend money without their parents’ permission, in order to maximise revenue.
In some instances, the children did not even realise that they were spending money from their parents’ cards. Meanwhile, some parents were unaware that Facebook stored their credit card information and when they would reach out to credit card companies to claim their money back, it would lead to Facebook racking up chargeback rates as high as 9 per cent of the revenue.
Even as the company employees suggested some ways to not bamboozle kids, Facebook clearly ignored these. Between October 2010 and January 2011, Facebook made a whopping USD 3.6 million from game purchases by children.
