Facebook no longer to ignore friendly fraud cases involving in-app payments made by children

Monday 28 January 2019 10:57 CET | News

Despite Facebook’s knowledge of children spending large amounts on in-app payments without parents’ permission, the company has chosen not to act, according to BBC.

A trove of internal documents have revealed that the social media platform decided not to implement certain safeguards as it might affect overall revenues from people paying for games. The documents formed part of a lawsuit that was settled in 2016, after which Facebook agreed to change its practices. Between February 2008 and June 2014, Facebook announced it made over USD 34 million from accounts belonging to minors in the US.

The investigation was prompted by Rovio, a Finnish game developer, which created Angry Birds. It told Facebook it had noticed an “alarmingly high refund rate, caused by what is known as “friendly fraud”. The term typically refers to instances when parents discovered a child has been using their credit card to buy features or add-ons in a game.

Facebook investigated what was causing so many refund requests. It seems that in most of the cases parents knew their child was playing Angry Birds, but didn’t think the child would be allowed to buy anything without their password or authorisation first.

While Facebook did not develop the games in question, payments were made through its system which, at the time, did not have additional measures in place that required parents to re-verify card use if a child was spending more money. Facebook took a 30% cut of payments, with the rest going to the game’s developer, BBC continued.

After this incident the social media platform considered changing its system so that users under 17 who tried to make transactions worth over USD 75 would have to enter the first six digits of the payment card on file, in order to prove they were in possession of it, or could at least remember it.

Nevertheless, Facebook did not implement the idea, the online publication concluded.

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Keywords: friendly fraud, in app payments, fraud prevention, social media, Facebook, safeguards, payment authentication
Countries: World