Kids Groups Are Urging the FTC to Investigate Facebook Over In-Game Purchases

17 organizations want to know if the social network engaged in deceptive practices

The Center for Investigative Reporting found that one 15-year-old ran up $6,545 in charges over a two-week period. Getty Images
Headshot of David Cohen

Facebook is already under a great deal of heat from the Federal Trade Commission, and more could be on its way.

A group of 17 children’s advocacy organizations sent a letter (embedded below) to the FTC Thursday, urging it to investigate the social network over potential violations of Section 5 of the FTC Act, which covers unfair or deceptive acts or practices, as well as of the Children’s Online Privacy Protection Act, or COPPA, regarding how it handled in-game purchases by minors.

Josh Golin, executive director of Campaign for a Commercial-Free Childhood, one of the organizations behind the letter, said in a statement, “Facebook’s scamming of children is not only unethical and reprehensible—it’s likely a violation of consumer protection laws. Time and time again, we see that Facebook plays by its own rules regardless of the cost to children, families and society. We urge the FTC to hold Facebook accountable.”

The letter was prompted by documents unsealed in a 2012 class-action lawsuit against Facebook that settled in 2016.

The lead plaintiff in that suit, Glynnis Bohannon, alleged that she gave her son, a minor at the time, her credit-card information for a one-time $20 purchase in the Ninja Saga game. However, her payment information was stored by the social network, and her son ran up hundreds of dollars in charges for in-game purchases he believed he was making with virtual currency, not actual money.

The children’s organizations pointed out that the class-action settlement did not address potential violations of COPPA and that it expires in May, meaning Facebook could resume similar practices without FTC action.

They also noted that the settlement agreement does not require the social network to change its policy of placing the responsibility on minors to get permission from their parents, nor does it compel Facebook to prominently disclose to parents that their credit cards can be charged for further items.

In addition, the company is not required to issue refunds for unauthorized in-application purchases.

A Facebook spokesperson pointed to changes implemented since the suit was resolved, saying, “We have in place mechanisms to prevent fraud at the time of purchase, and we offer people the option to dispute purchases and seek refunds. As part of our long history of working with parents and experts to offer tools for families navigating Facebook and the web, Facebook also has safeguards in place regarding minors’ purchases. In 2016, we updated our terms and now provide dedicated resources for refund requests related to purchases made by minors on Facebook, including special training for our reviewers.”

The Center for Investigative Reporting’s request to unseal the documents from the case was granted earlier this year, revealing internal communications indicating that Facebook not only knew about the practice, but encouraged it.

Findings revealed by the Center for Investigative Reporting included use of the term “friendly fraud” to describe the process; a 15-year-old Facebook user running up $6,545 in charges over a two-week period, the use of casino-industry term “whales” to describe big spenders, and the rejection of a proposed solution by Facebook program manager of workforce planning and strategy, global software engineering Tara Stewart to require the first six digits of credit-card numbers to be re-entered before purchases could be made within certain games.

Common Sense Media CEO Jim Steyer said in a statement, “Facebook’s practice of ‘friendly fraud’ and referring to kids as ‘whales’ shows an ongoing pattern of the company putting profits over people. Kids, under any circumstances, should not be the target of irresponsible and unethical marketing tactics.”

The letter states: “Given the scale of the fraud and the extent to which Facebook has been less than straightforward regarding its data policies in the past, we urge the FTC to investigate what personal information Facebook has collected from children, whether it has promptly deleted the information it did collect, whether it has removed accounts established by children under 13 and whether it has taken steps to ensure that in the future, no personal information from children will be collected, used or disseminated without complying with all of the COPPA provisions—including and especially on any games that are popular among young children.” David Cohen is editor of Adweek's Social Pro Daily.
Publish date: February 21, 2019 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT