Facebook Ripped Off Game-Playing Kids And Their Parents In Multi-Year "Friendly Fraud" Scheme

Facebook engaged in a multi-year effort to trick kids and their parents into racking up massive charges based on deceptive in-game purchases - then refused to give the money back, according to unsealed records in a class action lawsuit.

The in-game charges which added up to hundreds or even thousands of dollars were part of a system of "friendly fraud," according to Reveal News' Nathan Halverson, citing over 135 pages of unsealed documents which include employee emails, Facebook memos and secret strategies

When parents found out how much their children had spent – one 15-year-old racked up $6,500 in charges in about two weeks playing games on Facebook – the company denied requests for refunds.Facebook employees referred to these children as “whales” – a term borrowed from the casino industry to describe profligate spenders. A child could spend hundreds of dollars a day on in-game features such as arming their character with a flaming sword or a new magic spell to defeat an enemy – even if they didn’t realize it until the credit card bill arrived. -Reveal News

According to an internal document which reveals Facebook's strategy, the "friendly fraud" by game developers was encouraged in order to maximize revenues. Another internal Facebook report shows that the company knew that in-game purchase options defaulted to "the highest-cost setting," and that it "doesn't necessarily look like "real" money to a minor - nor that their parents' credit cards were linked to their Facebook account in order to spend real money in the games.

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