Facebook accused of tricking kids in complaint to FTC

Child advocates and other consumer groups are urging the Federal Trade Commission to investigate whether Facebook violated federal law by allegedly duping kids into spending their parents' money on online games. 

The complaint, which was sent to the  FTC  on Thursday, stems from an investigation by Reveal, a website run by the Center for Investigative Reporting. The nonprofit news organization, citing 135 pages of unsealed court documents from a 2012 class action lawsuit, reported that the social network facilitated "friendly fraud" by encouraging game developers to let kids spend their parents' money without consent. Facebook settled that lawsuit in 2016.

Facebook  said it updated its policies in 2016 to address purchases made by minors.

"We have in place mechanisms to prevent fraud at the time of purchase and we offer people the option to dispute purchases and seek refunds," a company spokesman said in a statement. "As part of our long history of working with parents and experts to offer tools for families navigating Facebook and the web, Facebook also has safeguards in place regarding minors' purchases."

More than a dozen advocacy groups, including Common Sense Media and the Campaign for a Commercial Free Childhood, say the lawsuit wasn't enough and that the FTC should investigate to ensure Facebook doesn't take advantage of children and their families in the future.

"Facebook's internal documents indicate a callous disregard for young people and a culture that prioritized profits over people," according to a draft of the complaint viewed by CNET. 

The FTC confirmed it received the complaint but said it had no additional comment.

By allegedly tricking children into spending their parents' money, Facebook may have violated the FTC Act, a federal law that prohibits "unfair or deceptive acts" from affecting commerce, the complaint states. The groups also argue that Facebook may have run afoul of the Children's Online Privacy Protection Act that protects children under 13 years old.

"Documents demonstrate that Facebook knew that certain games were highly popular with young children, some as young as 5 years old," the complaint stated. "This calls into question Facebook's claims that its entire platform is for a 'general audience,' as these games appear targeted to youth."

The groups also want the FTC to look into the data Facebook collected from children and whether it deleted this information. 

The FTC is already investigating Facebook over its privacy practices, and the social network could face a record-setting fine from the agency. 

On Thursday, lawmakers urged the FTC to review the complaint and expressed disappointment in Facebook's response to its questions about the purchase of games made by minors. In a letter to Sens. Edward J. Markey, D-Mass., and Richard Blumenthal, D-Conn., Facebook denied allegations it encouraged "friendly fraud."

Lawmakers, though, called Facebook's answers to their questions "inadequate." 

"It shouldn't take another settlement for Facebook to meet its ethical obligation to protect kids and families on its platform," Markey and Blumenthal said in a statement. 

First published Feb. 21, 7:20 a.m. PT.
Update, 8:48 a.m. PT: Includes statement from Facebook and FTC. Update, 3:38 p.m. PT: Includes statement from lawmakers.