Facebook's 'Friendly Fraud' Scandal: What Parents Need to Know
A new report says the company allowed children to ring up credit card debt on video game purchases
Facebook knowingly allowed children who played games on its platform to rack up big credit card charges, even after staffers warned about the problem and proposed solutions for the practice some employees referred to as "friendly fraud," according to a report from the Center for Investigative Reporting's Reveal.
The organization filed to have court documents unsealed and it says those documents, which span 2010 to 2014, also show that Facebook often refused to refund the money—in some cases, thousands of dollars—that was earned without parental permission in games such as Angry Birds, Ninja Saga, and PetVille.
"This story is shocking, but the details are sadly not surprising to anyone who has been following the industry over the past several years,” says Anna Laitin, director of financial policy for the advocacy arm of Consumer Reports. "If this report is accurate, Facebook knew that kids and their parents were being ripped off, but consciously decided to continue the practices anyway and keep as much money as it could. This is just another indication of how Facebook has prioritized growth and revenue over the welfare of its users."
The Larger Problem
For parents, the tactics reportedly used in Facebook's "friendly fraud" strategy may sound familiar.
In March 2014, Apple signed a consent decree with the Federal Trade Commission, agreeing to pay a minimum of $32.5 million to consumers billed for unauthorized in-app purchases made by children. Three years later, Amazon agreed to pay $70 million in a similar agreement with the commission.
Though the digital purchasing process has improved over time, young gamers still are routinely exposed to all sorts of in-game offers. Games such as Fortnite use limited-time offers to drive demand for virtual items, such as costumes (known as skins), equipment, and funny dance moves, for use in play. The items can cost as much as $20 and require so-called “V-Bucks”—sold only in $10, $25, $60, and $100 increments—for purchase.
Other games such as Overwatch and Counter-Strike: Global Offensive offer “loot boxes,” virtual treasure chests that function much like a slot machine. They must be purchased or earned through gameplay before the random prize inside is revealed.
What You Can Do
If you want to contest a charge on Facebook, the company has an online form that you can access via the link on this Help Center page.
An easy way to limit your child's spending is to use a pre-paid gift card for your child’s in-game purchases. Facebook Gift Cards are available at retailers such as Amazon, Best Buy, and Walmart. But you can also use the pre-paid cards supplied by credit card companies at grocery stores and pharmacies.
And, finally, smartphones include parental controls that can help you oversee your children’s in-app purchases.
Android users with a family account on the Google Play store can require a password or other form of authentication for all in-app purchases. The step-by-step instructions for doing that are available here.
Apple users can utilize the parental controls in the company’s Screen Time feature. The step-by-step instructions for that are here.