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Facebook Deliberately Allowed 'Friendly Fraud' To Avoid Harming Revenue (gizmodo.com)
An anonymous reader quotes a report from Gizmodo: Newly unsealed court documents show that Facebook was aware that underage children routinely used their parents' payment information to spend large sums of money on in-game purchases, and the company chose not to fix the problem. For years, it allowed for what it called "friendly fraud" because it feared implementing protections would harm revenue, according to the documents. In 2016, Facebook settled a class-action lawsuit brought by parents of children who were tricked into unwittingly making purchases with real money while playing free video games hosted on the social media platform. Despite its recognition of the problem, internal discussions show that Facebook decided it would be best to fight refund requests and allow the problem to persist. Documents related to the case were placed under seal because Facebook successfully argued that releasing them to the public could harm its business. Reveal, a publication run by the Center for Investigative Reporting, argued that these documents were in the public interest; last week, a judge granted Reveal's request to release the documents. On Thursday night, 135 pages from the court proceedings were unsealed, though Facebook was allowed to maintain some redactions.
Publicly traded companies are required, by law no less, to seek ever greater and greater revenue.
This is a myth. Public companies have no legal obligation to maximize profits.
Publicly traded companies are required, by law no less, to seek ever greater and greater revenue.
This is a myth. Public companies have no legal obligation to maximize profits.
Technically true in the general case. The situation is further complicated by the fact that the phrase "maximize profits" is not well defined.
However, there are legal obligations that in practice do cause corporate officers to make decisions to advance profits of the corporation at the expense of the public (or even the interests of the corporation, or the corporate workforce).
Directors and officers of a corporation in many cases must act in the same manner as a reasonably prudent person in their position would. This is called the "duty of care". This DOES create a legal obligation. The details of the obligation depend upon the details of the documents of incorporation.
Further, it's not just a question of whether or not somebody HAS acted appropriately, it's often a question of whether or not they are perceived as having acted appropriately.
Failure to be perceived as having acted appropriate with respect to the duty of care is grounds for a lawsuit - and many such lawsuits have occurred over the years.
Given the abuses of tort law that are routine in US law, and the massive problems with legal ethics, the fear of such lawsuits is one factor that causes corporate officers to make bad decisions in matters where they must choose between short term profits, long term profits, the good of the workforce, the good of the stock-holders, and the good of society.
Stupidity, short-sightedness, greed and other forms of self-interest on the part of many corporate officers makes a bad situation worse. But even good people can be pushed into making the wrong decision as a result of the threat (or reality) of a lawsuit. This is a fundamental problem that is often not understood by certain political groups (such as many libertarians), leading to serious problems with their political views.
The lawyers aren't the only unethical ones (though they certainly try to hide how bad the problems are in their profession - your reference is quite misleading in this regard). There are many mutual fund officers and other majority stockholders that are quite unethical, and will try to pressure corporate officers into advancing the short term interests of these special parties at the expense of the public, or at the expense of the long term interests of the corporation (including the interests of the employees). For example, almost every hostile takeover - and the actions that follow - ultimately will come down to multiple (and often massive) failures of ethics.
Reality and perception can be very different things: actions that are in reality correct can be construed as being inappropriate by interested parties, and often the ability to shape reality is more important in determining the outcome then the facts on the ground. Lies, misinformation, and deception trump reality.
It's a lot like the situation in government, where special interest groups are always trying to advance themselves at the expense of the public. Often they are extremely successful at this (see The Captured Economy for many examples compiled by economists, including some pithy quotes on ethics problems with the practice of law in the USA).
The public and the ordinary corporate workforce, of course, ultimately pays a steep price for all the legal shenanigans. The economy as a whole is impacted in a negative way, and the problems lead to job loss, numerous forms of hardship, people being killed by defective products, and even suicides. Ethics problems in law and business can be extremely destructive. Hopefully over time society will become a lot less tolerant of these problems, but I won't hold my breath.