Facebook made millions off of children spending their parents’ money on addictive gaming

Angry Birds are pricey.
Angry Birds are pricey.
Image: Reuters/Carlo Allegri
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Facebook let kids spend thousands of dollars on games without their parents’ permission, documents from a class-action lawsuit show, according to an investigation published by the news organization Reveal Jan. 24.

In internal communications, Facebook referred to the practice as “friendly fraud,” encouraging developers to let it happen, Reveal reports, while calling high-spending children “whales,” a nickname commonly associated with big players at a casino. The games included the uber-popular Angry Birds, as well as Ninja Saga.

Reveal obtained the documents, which span from 2010 to 2014, after it petitioned a federal court in California to unseal them.

“Facebook works with parents and experts to offer tools for families navigating Facebook and the web,” the company said in a statement sent to Quartz. “As part of that work, we routinely examine our own practices, and in 2016 agreed to update our terms and provide dedicated resources for refund requests related to purchases made by minors on Facebook.”

Sometimes the kids didn’t know that the money they were spending on games came from their parents’ credit cards, which had been linked to their Facebook accounts, or that they were spending real money at all, while parents didn’t know it was possible for their kids to be using their credit cards without any sort of authorization. Facebook knew about this, the internal documents show. Simply clicking a corner of a Ninja Saga’s screen that gives a player new magical abilities can quickly rack up a $20 charge.

The parents would turn to their credit card companies to try to get the money back, which lead to Facebook racking up so-called “chargeback” rates going up to 9% of the revenue it received from the games. Normally, a chargeback rate of 1% is high, and raises concerns of fraud with credit card companies, according to Reveal.

Facebook employees suggested ways to stop the kids’ uncontrolled spending, but the company never implemented the solutions. The money coming in from these games was substantial. During just a three-month period between 2010 and 2011, children spent $3.6 million on games on Facebook, the company’s analysis showed, according to the unsealed documents.

Children under 13 aren’t permitted to have accounts on Facebook, but documents from the case showed that the average age of an Angry Birds player was just 5 years old.

On the same day that the Reveal’s story was published, Facebook CEO Mark Zuckerberg released an article of his own, an op-ed in Wall Street Journal. In it, he offers a defense of his company in face of all the criticisms it has received over the past couple years. Referring to Facebook’s targeted advertising model, Zuckerberg writes: “This model can feel opaque, and we’re all distrustful of systems we don’t understand.”

It’s hard to take that statement at face value when your company takes advantage of kindergarten-aged children.