Facebook Class Action Lawsuit Docs Reveal ‘Friendly Fraud’ Tricked Kids

Documents recently unsealed after legal action by The Center for Investigative Reporting show that Facebook bilked kids and parents out of money using in-app purchases and kept doing so even though an employee had discovered a fix.

According to the report and unsealed documents published on Reveal, internal Facebook communications called the effort that affected such games as Ninja Saga, PetVille, and Angry Birds “friendly fraud.”

Reveal reports that the unsealed documents prove that game developers tricked kids into spending money on in-app purchases that were not controlled by Facebook, despite available technology that would stop the practice.

In fact, the social medical giant reportedly encouraged these developers to not even let children using their games know that they were spending their parent’s money, according to documents unsealed by Reveal – and they did so for years to drive up revenue.

The Reveal report comes as the social media giant attempts to settle a Facebook in-app class action lawsuit alleging that children were allowed to enter into contracts for game purchases without their parent’s knowledge or consent.

According to the class action lawsuit, Facebook failed to prevent minors from making in-app purchases on their parents’ credit cards without parental permission.

Though the Terms of Service on the site states that those under 18 should consult a parent before making purchases, parents, some of whom were hit with thousands of dollars in in-app charges, allege that this statement is not enough.

The proposed Facebook in-app purchases class action lawsuit was certified in 2015.

The documents reported by Reveal show that Facebook was aware of the problem. In fact, according to the article, records of parents who turned to the Better Business Bureau and credit card companies over the charges discovered that Facebook’s revenue from the in-app purchases blew past Federal Trade Commission indicators for deceptive practices.

Some parents did not even receive receipts for such purchases, says the report by Reveal, citing an unsealed document

According to Reveal, the unsealed documents show that Facebook was well aware that its in-app purchases were tricking kids into charging their parents’ credit cards.

A 2011 communication from an employee acknowledged that parents were increasingly demanding credit card refunds for such purchases.

While the Facebook employee who sounded the alarm started working on a way to stop the problem, an internal memo distributed that same year indicated that game developers were going to be encouraged to commit so-called friendly fraud. “Friendly Fraud – what it is. why its challenging, and why you shouldn’t try to block it” reads an email unveiled by The Center for Investigative Reporting.

Both the Reveal article and the Facebook in-app purchases class action lawsuit contend that parents and their children often had no idea that they were spending money as a part of these online games.

Parents say that they were not aware that the app stored their credit card information – often given to spend a small amount of money within the app.

Further, the games themselves were reportedly not transparent about when money would be spent on each game, with children reporting that they thought they were spending fake game coins rather than using real money.

The plaintiffs are represented by C. Brooks Cutter and John R. Parker Jr. of Cutter Law PC, Daniel B. Edelman of Katz Marshall & Banks LLP and Benjamin Edelman.

The Facebook In-App Purchases Class Action Lawsuit Settlement is I.B., by and through Glynnis Bohannon, et al. v. Facebook Inc., Case No. 5:12-cv-01894, in the U.S. District Court for the Northern District of California, San Jose Division.