Facebook is once again in the news, and not in a good way, according to a report citing court documents.
According to court documents dug up in a class action suit against Facebook, the social media giant has a system in place to keep in-game spending by children in check. Instead, it ignored these solutions in order to maximize profit.
News of the company’s stance comes from internal documents used in the class action lawsuit. The documents cite internal Facebook memos, “employee emails and more,” according to GI.biz. All 135 documents were published in a report from Reveal from The Center of Investigative Reporting. The documents from the court also make note of a rise in complaints and refund requests by parents.
The report states Facebook had solutions in place to keep children from over spending in browser games hosted by the social network. But, the company decided against implementing these solutions in the name of profit.
An internal study showed children had spent $3.6 million on games between October 2010 and January 2011. One parent said their 15-year-old spent $6,500 in two weeks time.
Rovio was listed in the documents as having noticed a 5% to 10% refund rate through Facebook. The Rovio employee said the rate “seemed quite high”. Apparently, 93% of refund requests for the company’s Angry Birds game came from parents whose children didn’t have permission to spend money on the title through Facebook.
Many people were also unaware Facebook stored their credit card information, according to a survey conducted. They were also unaware their children were able to charge in-game purchases to them “with passwords or any other form of verification.”
The documents also state Facebook denied the majority of refund requests. Instead, it encouraged the game developers to offer free items to children and parents who complained. This is because, as one Facebook employee said, unlike refunds “virtual goods bear no cost.”
Many parents took advantage of credit card chargebacks, which accounted for 9% being claimed back. The average is around 0.5%, according to the Federal Trade Commission (FTC). The independent government agency considers 2% charageback claims against companies a “red flag.”
Lordie. What a mess.
It’s an interesting report, and GI.biz has the full thing. You should go give it a read.