Facebook defines “friendly fraud” as knowingly tricking kids into game charges that end up on a parent’s bank card. As a result, Facebook’s public image continues to take a beating into 2019 — maybe with good reason.
A new report shows that executives as far back as 2012 knew full well that children were spending money on adding features to Facebook games, likely without parental consent, and did nothing to stop it.
According to documents obtained by the nonprofit Center for Investigative Reporting, Facebook employees considered measures to reduce the chances of kids running up charges on parents’ credit cards without their knowledge. But company management didn’t adopt the measures for fear of undermining revenue growth that helped boost the stock price and employee compensation packages.
A Facebook statement failed to address its rejection of these recommendations to prevent “friendly fraud.” Instead, the company said it has offered refunds and changed its practices. No apology to consumers; just an assurance that business practices have been reviewed and changed.
This change did not occur when parents began complaining and asking for refunds from Facebook because kids, unbeknownst to the parents, had charged thousands of dollars in a single month. Facebook initially refused to honor the requests, even in an extreme case when one teen racked up more than $6,000 in charges on a parent’s card in a single month. It wasn’t until many parents complained to the Federal Trade Commission for action that these allegations were investigated.
The uncovered documents point to Facebook’s predatory business practices. In fact, the documents reveal that the revenue Facebook earned off children this way had large chargeback rates. Credit card companies were forced to step in and claw back money on behalf of parents, which alone points to deceptive business practices.
And if you think Facebook is the only prominent technology company guilty of a revenue-over-everything-else mentality that took advantage of game-loving kids, you’d be wrong. As part of a 2014 settlement with the FTC, Apple agreed to issue $32.5 million in refunds for allowing kids to make in-app purchases without parental consent. That same year, Google settled similar charges for $19 million. Amazon had to give back $70 million in refunds.
As consumers, we have the ultimate power to decide with our purchasing dollars which companies we want to support — at least, for now. Unfortunately, our choices are becoming fewer as brick and mortar stores are going out of business. This will eventually leave us with no choice but to do business with companies who conjure up nice sounding words like “friendly fraud” to explain away their deceptive business practices to take advantage of unsuspecting consumers.
PERPS PICK ON PAYPAL: A reader from Coeur d’Alene called to warn us about an authentic-looking email he received from PayPal. The email was asking for verification of information so they could update our reader’s record. However, the tell-tale sign of a scam was they asked that his Social Security number be verified too.
Our suspicious reader, thinking this sounded odd, called PayPal to get the real story. The email turned out to be a scam. PayPal did not send the email and it told our reader it does not ask customers to verify their Social Security number.
If you receive such an email, do as our reader did and contact PayPal directly. It will probably ask that you forward the email to it, ignore the instructions and throw it away.
CREDIT UNION CREDIBILITY HIT: Imagine logging into your bank account, searching for a direct deposit or verifying that a check cleared, only to find that your account says you have an empty account balance. Yikes!
That’s what happened to Navy Federal Credit Union customers in December 2018. To make matters worse, customers were unable to call to speak with a live representative about the issue, leaving them in a panic. The good news is this situation was worked out. The company agreed to pay overdraft charges (if any occurred) and then assured customers their accounts were safe.
But now in late February, it’s happened again. This time the issue was delayed deposits in customer accounts. The company has acknowledged that members might still experience intermittent issues accessing the mobile app and phone services and has issued an apology to its members. A Navy Federal spokesperson further stated, “We can confirm our recent service disruptions are not related to security, and can assure our members their accounts are safe.”
It would be nice to know why the company is having these issues again and just how safe customers’ accounts really are. If you have questions, call the credit union directly to make sure everything is all right with your account.
Remember: I’m on your side.
If you have encountered a consumer issue that you have questions about or think our readers should know about, please send me an email at email@example.com or call me at 208-274-4458. As The CDA Press Consumer Gal, I’m here to help. Please include your name and a phone number or email. I’m available to speak about consumerism to schools, local and civic groups. I’m a copywriter, columnist and consumer advocate living in Coeur d’Alene.