Facebook targeted by privacy groups over kids’ in-game purchases

Facebook Inc. is confronting another complaint about its online practices — this time from privacy advocates that are concerned the company tricked children into making purchases while playing games on the social network.

The organizations, which include Common Sense Media, the Campaign for a Commercial-Free Childhood and the Center for Digital Democracy, argued in a letter to the U.S. Federal Trade Commission that Facebook may have engaged in unlawful “unfair or deceptive practices” and violated the Children’s Online Privacy Protection Act, known as COPPA, and requested that the agency conduct an investigation.

The FTC has already been probing Facebook, discussing punishment for privacy violations that could force the social-media giant to pay billions of dollars in a settlement. The current FTC inquiry focuses on whether Facebook violated a 2011 decree that required the company to respect its users’ privacy decisions. A record fine could come in the next few months, people familiar with the matter have said. Other government organizations, in the U.S., Germany and the U.K., are also looking into the company.

The COPPA is a separate issue. That law requires appropriate parental consent and disclosures when a website has “actual knowledge” it’s collecting information on kids younger than 13. The complaint disclosed on Thursday alleges that “documents show that Facebook was aware that many of the games it offered were popular with children under age 13, and that these games were in fact being played by children under 13,” including potentially those as young as 5 years old.

The complaint follows a Jan. 24 report that said some children spent thousands of dollars of their parents’ money without parental knowledge or permission, usually because the adults had previously entered credit-card information. Facebook internally called the practice “friendly fraud,” based on documents that a court unsealed at the the request of nonprofit Center for Investigative Reporting. As Facebook pursued revenue, it declined to implement a fix that would have curbed the practice and often refused to return the money, the report said.

In a letter dated Wednesday to two Democratic senators who had criticized the company over the revelations, Facebook’s vice president of U.S. public policy wrote that the company was “not currently engaged with the FTC on this issue.”

The executive, Kevin Martin, wrote that Facebook has always been aware of the risks of unauthorized payments and that potential users must be 13 years old before creating an account. Martin said the term “friendly fraud” was common in the payments industry, and that users must confirm each purchase, including its price. He told the senators that the company had been training reviewers and provided options for users to dispute purchases.

“We routinely examine our own practices with an eye toward improving the experience for families who use our services,” Martin wrote in the letter, which was released by the senators, Ed Markey of Massachusetts and Richard Blumenthal of Connecticut. “As part of that work — and as part of the court-approved settlement of the 2012 class action lawsuit — we have improved the process for requesting a refund for a purchase made by a minor.”

The senators said the response was insufficient because the company waited for a court decision to make many of its changes.

“It is clear that Facebook did not step in when it became aware that developers were encouraging children to make unauthorized credit card purchases, even when those games targeted children,” they said in a joint statement. The lawmakers also suggested Martin’s explanations were at odds with user reports and slammed the company for not offering “an explicit answer to our question about when Mark Zuckerberg became aware of Facebook’s friendly fraud problem.”

The lawmakers said the FTC should review Thursday’s complaint.

It’s not the first time Facebook has been the target of complaints specifically related to its use of kids’ data. A coalition of similar consumer groups led by the Campaign for a Commercial-Free Childhood has also urged Zuckerberg to shut down Facebook Messenger Kids. Earlier this year, Apple Inc. shut down a Facebook research app after Techcrunch reported that Facebook was paying teens to monitor their online activity.

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Facebook targeted by privacy groups over kids’ in-game purchases