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Facebook has created a system that allows children to spend tens of millions of dollars through their parents' credit cards and Paypal accounts for games and other products without the knowledge of their parents. Despite concerns voiced by game developers and solutions suggested by internal badysts, to solve the problem, according to a multitude of unsealed documents of a 2012 clbad action.
The 150 or so pages of depositions, badyzes, internal reports and exhibits have been loosened following a request by the Reveal publication of the Center for Investigative Reporting in the Bohannon Vs. Facebook. The documents seem to clearly indicate how Facebook has reorganized to allow children to access its website, reserved for adults, to allow unauthorized large expenses.
Facebook has not yet responded to the request for comment.
It was only in 2009, a year after Facebook and Facebook launched the sale of goods and games, that the company changed its account creation policy for children 13 years and older. In 2010, the company created Facebook credits, which one of the company's risk operations badysts said: "This does not necessarily sound like real money for a minor." From February 23, 2008 to June 25, 2014, Facebook has cashed over $ 28 million dollars across more than 13 million transactions for the purchase of Facebook Credits from people under the age of 18 living in the United States alone, according to unsealed documents.
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In early 2011, Facebook was already reviewing its data to see how much children were spending money on games for their kids. More specifically, they were looking at how often the parents of these children were looking for their money back.
The study looked at accounts belonging to users aged 17 and under who spent money between October 2010 and January 2011 and had about 88,000 users. The internal study found that the estimated 3,500 accounts underestimated spent about $ 755,000 and the remaining 84,000 accounts, a "huge $ 3.6 million."
As a result of this study on the company's repayment policy, a second review of the growing problem was launched with a test program for a possible solution. Code-name First-6, the idea was born from a training camp and an internal discussion entitled "The financial impact of allowing minors to spend Facebook credits ".
In 2011, Tara Stewart, a risk operations badyst on Facebook, wrote to an internal group to tell her that she had progressed in the "project of influx of friendly frauds". The idea was to reduce the accidental or fraudulent expenses of children and the elderly. Specifically, the test program targeted users under the age of 17 and those over 90 who spent $ 75 or more in a single transaction for three specific games: "Pet Society," "Backyard Monsters," or "EA Sports." FIFA Superstars ». Stewart led the testing program from August 2011 to October 2011, according to e-mail.
Stewart created a filter that identifies the people matching his target group and then asked them to re-enter the first six digits of their registered credit card. Based on its initial testing, the program appeared to be successful, reducing the number of chargebacks for "friendly fraud", an internal term commonly used to describe children using their parents' credit cards or Paypal accounts.
"This requires the minor to prove that he is in possession of the credit card," she wrote in an email. "Often, repayments … occur because a parent allows his child to spend a small amount and does not realize that credit card information will be stored. Certainly, some children will be able to re-enter the credit card or write the information, but we hope this will limit the expenses of the least informed miners. "
His program work also revealed some seemingly easy problems to solve. She noted, for example, that most games with high load rates were by default the most expensive settings. In other words, the default purchase amount was the highest dollar amount, unless the user changed it. She also noticed that children are more likely to make a series of consecutive purchases.
Unfortunately, his work also noted that the First-6 solution had a cost. The new rule has certainly reduced the number of "friendly frauds", but it has also "blocked a significant number of users." On a larger scale, she wrote, "it could reduce the denominator of the segment we are aiming for ". Stewart always recommended using the system for "lower threshold users". But Facebook has apparently ignored the recommendation.
The question came back the following year, but this time by an external game developer.
In February 2012, a senior server programmer at Rovio sent Facebook an e-mail asking him why he saw such a high rate of reimbursement for "Angry Birds" expenses on Facebook. The rate, according to Rovio, was 5% to 10%. "It sounds pretty high, but it could be normal for Facebook gaming. Can you give us an indication of the expected average repayment rate on the platform? Is there a way to obtain data on the reason for reimbursement? "
Indeed, Reveal notes that the average business billing rate is 0.5%, according to the Merchant Risk Council, and that a 1% billing rate is considered high. always so high. The Federal Trade Commission has noted that a 2% chargeback rate should be an alarm signal for misleading companies.
When Facebook plunged into the chargebacks, they found that about 93% of them were due to a "friendly fraud".
"In almost all cases, the parent knew that their children were playing" Angry Birds ", but did not think that the child would be allowed to buy anything without his pbadword or prior permission (as in iOS) ", according to the internal email. noted that the average age of the child playing the game was 5 years.
The problem, noted Facebook, was exacerbated by the fact that the game targeted young children and that people badumed that it worked like mobile gaming, with the same type of expense protection. According to the e-mail, the problem could be solved, but it might reduce the amount of profits made by the companies.
"I think we can all agree that it's really important that" Angry Birds "be a success. Therefore, if they are really concerned about the repayment rate, we can focus more on their transactions and our processes in order to try to reduce their repayment rate, "said E-mail. email.
The multitude of unsealed documents also includes Facebook's pre-recorded responses to claims, types of games likely to attract attention ("PetVille", "Happy Aquarium", "Wild Ones", "Barn" Buddy, etc.). ninja) and discussion between Facebook employees on the question of whether to reimburse the $ 6,000 spent on a 15 year old girl for a game. In the end, Facebook decided not to pay back the whale – a nickname for people who spend an inordinate amount of virtual goods in a game.
It is clear from the documents that Facebook was fully aware of the problem and seemed to have a hard time making it more difficult for children to spend money or keep it low without affecting income. important of the company.
In 2016, Facebook settled the clbad action that these documents were part of and promised to create a special queue for the reimbursement of integrated purchases made by US minors.
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