Memos: Facebook Allowed 'Friendly Fraud' to Profit from Kids

Facebook's CEO Mark Zuckerberg delivers his speech during the Viva Tech trade fair in Paris

However, instead of rolling out this practice across the social network, the company chose to focusing on "maximising revenue" rather than limiting friendly fraud.

The records reveal, for example, that one 15-year-old ran up charges of $6,545 while playing games on Facebook for just over two weeks.

"The difficulty with friendly fraud is that we do not have a clear way to identify it at a purchase level because it looks like a good transaction", an employee wrote, adding that building "risk models" to reduce such cases "would most likely block good TPV [total purchase value]".

In a three-month period between 2010 and 2011, more than 9% of money made from children through online games was recovered by credit card companies.

Her team experimented with solutions to curb kids' spending with parents' credit cards (including requiring children to re-enter partial card numbers). The documents also show that Facebook typically refused refund requests when it received them from cardholders, according to the report.

In one document, an employee at Facebook discussed how the company could use the "data to choose apps that would be good recipients for an automatic underage inflow ... apps that come to mind: PetVille, Happy Aquarium, Wild Ones, Barn Buddy and any Ninja game".

RevealNews says this lawsuit was settled by Facebook in 2016. However, the woman soon saw charges totaling nearly $1,000.

Under the settlement, refunds were issued for purchases minors made between 2008 and 2015. The abbreviation "FF" stood for "Friendly Fraud", the term Facebook used to refer to these fraudulent purchases which were made without malicious intent. The judge ordered the social network to provide refunds at parents' request.

"There's no way that they didn't know these transactions were originating from Facebook accounts that were assigned to minors", said Bohannan's attorney John Parker.

The internal debate about how to address the recurring problem of kids spending big bucks behind their parents' backs occurred from 2010 and 2014 - a period that included Facebook's stock market debut in 2012. The class action case was settled by Facebook in 2016, agreeing "to dedicate an internal queue to refund requests for in-app purchases".

"We have now released additional documents as instructed by the court", a Facebook spokesperson said, in a statement emailed to Fox News.

Facebook issued the following statement to Tom's Guide: "We were contacted by the Center for Investigative Reporting past year, and we voluntarily unsealed documents related to a 2012 case about our refund policies for in-app purchases that parents believe were made in error by their minor children". The average is around 0.5%, according to the Federal Trade Commission (FTC).



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