Staff discussed what to do with high-spending children before deciding to refuse refunds

Facebook has settled a class action lawsuit that had accused it of allowing children to run up huge bills on their parents’ credit cards as part of a concerted effort to maximise revenues.

Court documents obtained by the US-based Center for Investigative Reporting, initially sealed as part of a lawsuit filed in 2012, revealed Facebook staff discussed what to do with the “whales”, as they referred to the high-spending children, before deciding to refuse refunds.

Internally, the company described the problem as one of “friendly fraud”, and one staff member, who was in charge of a project to increase the company’s game revenues, said it was particularly bad with a few games, including “PetVille, Happy Aquarium, Wild Ones, Barn Buddy and any Ninja game”.

Those games allowed users to buy in-game advantages with real money. But the link was frequently unclear to parents and children. Younger children just did not understand the concept, while older children and teens were unaware that their parents’ credit cards were linked to the accounts until they had run up bills in the thousands of dollars.

In an effort to tackle the problem, a team of Facebook staff put together a policy that would require children to re-enter some card details before they could buy the in-game items, to prove they had their parents’ permission. But the feature was never implemented.

In fact, Facebook’s explicit policy, as communicated to developers in an internal memo, was to tackle such complaints by handing out free virtual items, not by refunding the charges – because “virtual goods bear no cost”.

The lack of action stands in contrast to that of other companies facing the same issue, such as Apple, which issued a series of policies in 2013 requiring apps used by children to get parental permission before engaging in any commerce.

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The lawsuit that led to the release of the documents was eventually settled in 2016, when Facebook agreed “to dedicate an internal queue to refund requests for in-app purchases made by US minors”.

In a statement released on Friday, a Facebook spokesperson said: “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.”