Senators ask Facebook why it tricked kids into spending parents’ money - Ars Technica

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Two Democratic senators have asked Facebook CEO Mark Zuckerberg to explain why the social network apparently "manipulated children into spending their parents' money without permission" while playing games on Facebook.

"A new report from the Center for Investigative Reporting shows that your company had a policy of willful blindness toward credit card charges by children—internally referred to as 'friendly fraud'—in order to boost revenue at the expense of parents," US Sens. Edward Markey (D-Mass.) and Richard Blumenthal (D-Conn.) wrote in a letter to Zuckerberg today. "Notably, Facebook appears to have rejected a plan that would have effectively mitigated this risk and instead doubled down on maximizing revenue."

Because parents didn't know that children would be able to make purchases without additional verification, "many young users incurred several thousands of dollars in charges while playing games like Angry Birds, Petville, Wild Ones, and Barn Buddy," the senators' letter said.

Users requested refunds for more than 9 percent of the money Facebook made from children, but the system was stacked against them, the senators wrote. Facebook rejected an employee's proposal to fix the problem and instead "design[ed] a mechanism to automatically dispute its users' requests for refunds, without conducting any review of the requests themselves," they wrote.

Markey and Blumenthal asked Zuckerberg a series of questions, and they requested a response by February 19.

"When did Facebook personnel become aware that children were likely unknowingly spending their parents' money while playing games on your platform?" they asked. "When did you, as CEO, become aware of this issue?"

The senators asked Zuckerberg what policy changes Facebook has made to end the practice of children making in-app purchases without parents' knowledge. They also asked Zuckerberg if Facebook will refund users "in full for money that was spent by children as a result of Facebook's past policies."

The senators also urged Facebook to fully cooperate with any Federal Trade Commission investigation into the matter, though it isn't clear if the FTC has contacted Facebook about this.

"In order to mitigate additional risk of manipulating children on Facebook, will you commit to requiring all youth-directed content and services on your platform to be free of charge and without advertisements?" the senators also asked.

Facebook’s internal documents revealed

The Center for Investigative Reporting's report was based on newly unsealed documents from a class-action lawsuit filed against Facebook in 2012 in US District Court for the Northern District of California. The case was settled in 2016 and required Facebook to make changes to its refund practices and policies for minors.

The Center for Investigative Reporting filed a motion to unseal documents from the case in September 2018, and that motion was partially granted this month.

The court documents included "internal Facebook memos, secret strategies, and employee emails," the Center for Investigative Reporting noted.

The documents show that "Facebook orchestrated a multiyear effort that duped children and their parents out of money, in some cases hundreds or even thousands of dollars, and then often refused to give the money back," the group's report said. In some cases, children did not know that they were spending real money because they didn't realize their parents' credit cards were connected to their Facebook accounts, the report said.

"For years, the company ignored warnings from its own employees that it was bamboozling children," the report said.

We contacted Facebook today and asked the company if it disputes any of the allegations. Facebook did not dispute any of the allegations, but it gave us a statement that is nearly identical to one it previously gave to the Center for Investigative Reporting. It reads as follows:

We were contacted by the Center for Investigative Reporting last 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. We have now released additional documents as instructed by the court. Facebook works with parents and experts to offer tools for families navigating Facebook and the Web. 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.

Facebook confirmed to Ars that it received the letter from Markey and Blumenthal, but the social media giant did not provide a specific response. Facebook did point out that it offers users the option to dispute purchases and request refunds. For game charges, users can select "Purchase made by someone under 18 years old" as the reason for requesting a refund.

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