Do you remember playing house or war when you were little? Kids today are playing these “real-life” games online, and the companies hosting them are asking for real dollars to bankroll their fanciful experiences.
How could a child spend over $1000?
A judge unsealed 135 pages of Facebook’s internal documentation thanks to pressure from the Center for Investigative Reporting. They include records of the company’s growth from 2010-2014 and will show if Facebook unfairly enticed children to spend money without parental consent.
Facebook hosts a breadth of applications which allows it to corner the game market. These games sell virtual ways to ”level up” or gain access to hidden features like a new undiscovered level or extra lives. But even though you’re paying for things in the virtual world, the money spent is real.
This is all fine as long as an adult is there who consents to handing over their credit card. The problem is that they weren’t always there.
For example, say Dennis wanted to purchase a flaming sword for his Dragon Slayer game, and he asked his mom for her credit card. She conceded–but only this once– and he gave the card back after purchase. The trouble is that after Dennis entered the card information once it was stored on the platform permanently.
After this Dennis could purchase whatever he wanted through the game without any second authentication requirement.
A survey of Facebook users showed parents didn’t know their credit card information was being stored on Facebook. And they certainly didn’t know minors were able use their cards time and time again without having to enter any validation code or password.
How long did Facebook know about it?
What’s worse is Facebook knew minors could purchase these “level ups” alone as early as 2011. They referred to this practice where children spend money on the platform without parental permissions as friendly fraud.
Concerned Facebook employees knew minors might not realize the real-world implications of their in-game purchase. They developed different methods of purchasing virtual items that would require a second authentication — like entering the credit card number again.
These suggested improvements were dismissed because they would lower game revenues.
One 15 year old user unknowingly spent $6,545 in two weeks and when they asked for a refund because they didn’t know they were being charged for the add-ons, Facebook flatout denied it. The internal Facebook memo prepped employees to try giving away virtual elements, like swords, instead of refunding.
When people contested these charges through their credit card companies, Facebook would dispute them automatically and without review. Plus, pathways supposed to channel unsatisfied users were also broken so Facebook was not responding to any complaints.
Instead, Facebook collected insights to increase the monetization of these minors, recognizing they were likely to make impulsive purchases one after another. The tech giant even referred to some of these young buyers as “whales,” which is a term casinos use for big spenders.
Internal reports showed Facebook knew more than 9% of game revenue made from this young demographic was contested by credit card companies. As an industry baseline, credit card companies find chargeback rates of 1% high.
What’s privacy got to do with it?
With all the breaches in the past year there have been questions over a child’s age of consent to give away data or agree to cookies when surfing online. The truth is you need to look out for yourself because these companies won’t.
Facebook’s biggest game culprits were: PetVille, Happy Aquarium, Wild Ones, and Barn Buddy the Ninja games according to Tara Stewart, a Facebook employee who raised this problem to her colleagues.
Read this guide to remaining safe when playing games online and comment below with the precautions you take when you or your kids are playing online.