Facebook allegedly ignored children’s overspending on online games

25 Jan 2019

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Internal documents apparently show Facebook chose not to implement safeguards to stop minors overspending on online game purchases.

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.

Facebook handed over legal documents

The documents were provided by the company this week, following a request from Reveal at the Center for Investigative Reporting. On 24 January, the company obliged the request for supplementary information, which had originally been part of a class-action lawsuit focused on how the company targeted children to grow revenue for games such as Angry Birds.

Within the files, internal discussions between Facebook employees dealt with in-app payments and the problem of children unwittingly spending real currency to purchase items in games.

One risk analyst at the company, Tara Stewart, said that in-game currency “doesn’t necessarily look like real money to a minor”. Finnish game developer Rovio, the name behind Angry Birds, prompted the investigation by Facebook after noticing an unusually high refund rate.

Children spending without permission

It stemmed from high rates of what was referred to as “friendly fraud”, or children spending money on games without consent from parents or guardians. Internal reports at Facebook showed that young users did not know they were spending genuine cash on the in-game purchases.

One Facebook employee, Danny Stein, wrote: “In nearly 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.”

Staff at Facebook created a method that would have reduced the friendly-fraud problem on the platform, but the company did not implement it. They posited an option where users younger than 17 and older than 90 who tried to spend more than $75 at a time would need to enter the first six digits of the card on file, which would “curb the spending of the least-savvy minors”.

In a separate discussion, staff discussed a particular “whale” account, a term describing a high-spend customer. The account had spent more than $6,000 on in-app purchases and was deduced by staff to be underage. In conversation with another colleague about a purchase dispute regarding a minor, one Facebook employee suggested: “I wouldn’t refund.”

As part of the settlement of the 2016 case, Facebook said it works with parents and experts to provide tools for families. It agreed to update its terms “and provide dedicated resources for refund requests related to purchases made by minors on Facebook”.

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects