According to an investigation by Reveal, the social network orchestrated a multiyear effort that duped children and their parents out of money and often refused to refund the money.
Facebook is not the only prominent technology company that has been skewered for profitting from game-loving children who do not always understand how much of their parents' money they are spending while playing games in apps or websites.
However, Facebook reportedly engaged in a "friendly fraud" to allow children to spend thousands of dollars on games without their parents' permission.
Instances of children spending parents' money on games without their permission was labeled "friendly fraud" or "FF" in Facebook's internal correspondence.
"In almost 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 authorisation first", read one memo, written by Facebook employee Danny Stein.
Within the files, internal discussions between Facebook employees dealt with in-app payments and the problem of children unwittingly spending real currency to purchase items in games. Facebook settled the lawsuit in 2016; a U.S. District Court judge ordered the documents unsealed on January 14. In the worst case, one boy, who was reportedly 12-years-old at the time, spent $610.40 on "Ninja Saga" before his mother's credit card company flagged up the unusual activity. However, the solutions caused a decrease in Facebook's revenue, and the employees never fully implemented them as a result.
According to records that are part of a class-action lawsuit, and include internal Facebook memos, secret strategies and employee emails, the social media giant is engaged in what was internally dubbed "friendly fraud" in order to maximize its revenues.
"That user looks underage as well", one Facebook employee noted, perhaps a "13ish year old".
To parents who complained about surprisingly huge credit-card bills after their children built up big game expenses, Facebook had this to say, in so many words: "Forget it". A charge-back rate of 2% was a "red flag" of a "deceptive" business, according to the Federal Trade Commission.
RevealNews says this lawsuit was settled by Facebook in 2016. But the link was frequently unclear to parents and children. "Facebook works with parents and experts to offer tools for families navigating Facebook", a spokesperson said.
It added: "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".