Newly Revealed Documents Show Facebook Gleefully Refusing To Refund Money To Kids Who Ran Up Huge Bills On Mommy's Credit Card

from the coppa-coppa-coppa dept

Because Facebook wasn't looking awful enough already, some newly unsealed documents from a lawsuit going back a few years are now making the company look even worse, and certainly not doing the company any favors in its efforts to rehabilitate its reputation. Unfortunately, so far, Reveal, a project of the Center for Investigative Reporting, seems to only be revealing snippets of what's in the documents, rather than the full documents (come on guys...), but what they're sharing doesn't look great.

Specifically, a judge has unsealed previously sealed records from a 2012 class action lawsuit that was settled in 2016, concerning Facebook profiting off of children. The origins of the lawsuit involved a child who got his mother's credit card to play a game on Facebook, without realizing that the more he played, the more of his mother's money he was spending -- compounded by Facebook then refusing to refund the charges. The latest revelations show that Facebook employees knew that they made this information confusing, in a way that people (kids and adults alike) might not realize they were still spending money off of a credit card, and also having joking conversations about people trying to get their money back. Indeed, the snippet Reveal has released has Facebook employees referring to one teenager as "a whale" -- a term used in casinos to refer to big spenders.

In one of the unsealed documents, two Facebook employees deny a refund request from a child whom they refer to as a “whale” – a term coined by the casino industry to describe profligate spenders. The child had entered a credit card number to play a game, and in about two weeks racked up thousands of dollars in charges, according to an excerpt of messages between two employees at the social media giant.

Gillian: Would you refund this whale ticket? User is disputing ALL charges…
Michael: What’s the users total lifetime spend?
Gillian: It’s $6,545 – but card was just added on Sept. 2. They are disputing all of it I believe. That user looks underage as well. Well, maybe not under 13.
Michael: Is the user writing in a parent, or is this user a 13ish year old
Gillian: It’s a 13ish yr old. says its 15. looks a bit younger. she* not its. Lol.
Michael: ... I wouldn’t refund
Gillian: Oh that’s fine. cool. agreed. just double checking

Fine. Cool. Agreed. Or not. Not cool at all. And that's even if you argue (as some have on Twitter) that the "whale" comment is actually a typo for "whole" (and argument multiple people who worked in the space dispute, noting that "whale"/casino terminology was common in online games).

While you might just chalk this up to a conversation among perhaps lower level Facebook employees with screwed up incentives, Reveal notes that other documents make it clear that people within Facebook knew that their confusing UI was contributing to a problem:

Facebook employees began voicing their concerns that people were being charged without their knowledge. The social media company decided to analyze one of the most popular games of the time, Angry Birds, and discovered the average age of people playing it on Facebook was 5 years old, according to newly revealed information.

“In nearly all cases the parents knew their child was playing Angry Birds, but didn’t think the child would be allowed to buy anything without their password or authorization first,” according to an internal Facebook memo. The memo noted that on other platforms, such as Apple’s iPhone, people were required to reauthorize additional purchases, such as by re-entering a password.

A Facebook employee noted that children were likely to be confused by the in-game purchases because it “doesn’t necessarily look like real money to a minor.”

The documents also note that Facebook didn't send receipts for these purchases, meaning that parents wouldn't know about them until way later when the credit card bill shows up. Oh yeah, also "links on the company’s website to dispute charges frequently failed to work."

While one might try to argue that this is something that happened many years ago, when Facebook wasn't that careful about things, the company's reaction to these documents finally being revealed isn't great either:

In response to a request for an interview, Facebook provided a one-sentence statement: “We appreciate the court’s careful review of these materials.”

That's... not going to cut it. In the past year, almost every internet company I talk to is simply seething about Facebook and how it's basically destroying everything with the hamfisted way it deals with... almost everything. The company's ongoing and never-ending "apology tour" isn't changing anything, and if the company can't figure out that it has to take real ownership of its many problems, past and present, it's never going to fix them, nor rebuild trust. Responding with that sort of PR speak, rather than saying "we royally fucked up, but that was many years ago, and here are all the concrete steps we've taken to fix this" is just incompetent. The company has been in the limelight for so long yet it still doesn't seem to fathom how to deal honestly with a press that is calling out its many faults. While it is true that plenty of press coverage of Facebook in the past year has been misleading or unfair, the unwillingness of the company to take its real problems seriously, is a huge issue not just for Facebook, but for every other internet company as well.

Filed Under: coppa, credit cards, kids, online games, refunds, whale
Companies: facebook


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  • icon
    Vidiot (profile), 18 Jan 2019 @ 3:10pm

    Well, there's "refusing to refund", and then there's "still refusing to refund". Standard customer service policy is to refuse the first request, and then play out the scenario... see how serious they really are. Cave too quickly, and every customer wants every purchase refunded, they think; wait too long in the dialogue, and kiss the customer goodbye.

    As you suggest, it's much less an issue of refunds, but more about how easy it is for kids... or barely-competent adults... to run up obscene bills on in-game purchases. Good luck attacking that cash cow, though.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2019 @ 3:53pm

      Re:

      Well, there's "refuse to refund", and then there's a thing called a chargeback for unauthorized use on the card. Facebook not following its own terms of use (requiring those under 18 to only use Facebook with approval of parent or guardian) is breach of contract -- therefore sale.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2019 @ 3:38pm

    You act like Facebook will ever learn? They’ve been rewarded almost beyond reason, absent serious incentive to change, they won’t.

    reply to this | link to this | view in chronology ]

    • icon
      Thad (profile), 21 Jan 2019 @ 7:21am

      Re:

      They've been getting increasingly bad PR over the past couple of years, and it has begun to hurt their bottom line. This is one more straw on the camel's back. This won't be the one to break it, but if Facebook keeps getting bad news, it's going to have long-term consequences.

      Or maybe everybody will just switch to Instagram and not realize it's the same company.

      reply to this | link to this | view in chronology ]

  • icon
    Anonymous Anonymous Coward (profile), 18 Jan 2019 @ 4:49pm

    To Think

    That Facebook will be only 15 years old next month, yet they did things 'years ago' that might shock ones consciousness. Come on, they are still teenagers themselves.

    Yet they are a corporation, and a big one at that. One would tend to believe that they could hire some competence, and then display it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2019 @ 4:50pm

    How does (did?) it work when Facebook refunds someone for gaming purchases? They were just the middleman for others (Zynga, one assumes) that ultimately got the majority of the money so if they refund a user, do they just eat the amount that goes to the other company?

    reply to this | link to this | view in chronology ]

    • icon
      DB (profile), 18 Jan 2019 @ 5:28pm

      Re:

      I'm guessing that Facebook can push the refund back onto the supplier, the same as they would do if a stolen credit card had been used.

      Presumably Facebook doesn't remit the payments to the game supplier until well after the refund liability has passed, and even then they reserve the right to debit any refund from future payments. And since Facebook has the power in the relationship, they probably charge the supplier for the cost of refunding.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2019 @ 6:29pm

    Can we try not giving facebook hints on how not to collapse? Let 'em die off and their business model with 'em.

    reply to this | link to this | view in chronology ]

  • icon
    techflaws (profile), 18 Jan 2019 @ 11:30pm

    Stupid question but why are court documents in cases like these sealed?

    reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 19 Jan 2019 @ 5:54am

      Re:

      Probably because nearly all the evidence is account numbers and credit card numbers and personally identifiable info.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Jan 2019 @ 8:52am

      Re:

      "Stupid question but why are court documents in cases like these sealed?"

      A very pertinent question that was answered in the original article, but which Mr. Masnick completely omitted to include in his writeup. Here's the actual text:

      "The judge agreed with Facebook’s request to keep some of the records sealed, saying certain records contained information that would cause the social media giant harm, outweighing the public benefit."

      So it seems the judge thought it was more important to protect Facebook's reputation (and continued profitability) than the need to inform the public about Facebook's unethical business practices.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Cowherd, 19 Jan 2019 @ 7:13am

    Sucks to be a bad parent

    Any parent that gives a teenager their credit card to use unsupervised, deserves exactly what they get.

    reply to this | link to this | view in chronology ]

    • icon
      Wolfie0827 (profile), 19 Jan 2019 @ 9:20am

      Re: Sucks to be a bad parent

      That is part of the point, FB did not make it clear that further purchases would be authorized by what the parent/child thought was a one time purchase. Most other companies make that clear from the outset or give the option to set it as one time purchase or full authorized for any purchase.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Cowherd, 20 Jan 2019 @ 11:10am

        Re: Re: Sucks to be a bad parent

        A properly cautious credit card user does not leave their card attached to an account and simply assume it can't be used for further purchases, unless they're explicitly told it can't.

        Notwithstanding modern legal systems routinely holding everyone responsible for people's carelessness and/or stupidity except the people being careless and/or stupid, I believe those people got what they deserved for being careless with their money.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Jan 2019 @ 12:51pm

    "Gleefully?"

    How was that conclusion reached?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Jan 2019 @ 2:29pm

      Re:

      1) Because that is default mode for most businesses, never mind corporations.
      2) It's FB.
      3) As seen in the FB employee conversations from court documents.

      reply to this | link to this | view in chronology ]

    • icon
      Thad (profile), 21 Jan 2019 @ 7:23am

      Re:

      In one of the unsealed documents, two Facebook employees deny a refund request from a child whom they refer to as a “whale” – a term coined by the casino industry to describe profligate spenders.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Jan 2019 @ 1:09pm

    Dumb humans still bank at Wells Fargo too.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Jan 2019 @ 6:27am

    Why not have a hard cap of say $100 for the game? After that amount, continued game play should not be charged. Guess its like our crappy TV, just keep charging for the same content over and over.

    reply to this | link to this | view in chronology ]


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