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.

Comments

Facebook Is Like The Oil Companies Of Old

[dryriver]

Probably even financed by the same investors. No regard for anyone.

Re:Facebook Is Like The Oil Companies Of Old

[infolation]

Talking of investors, it was interesting the facebook devs used 'boiler room' terminology (whales) to describe the high-spending children:

Court documents obtained by the US-based Center for Investigative Reporting, initially sealed as part of a lawsuit filed in 2012, revealed Facebook staff discussed what to do with the "whales" , as they referred to the high-spending children, before deciding to refuse refunds.

source

Re:Facebook Is Like The Oil Companies Of Old

[Anonymous Coward]

Probably even financed by the same investors.

Standard Oil turned into the "Liberal CIA" foundation network of "charities" that act like a single gigantic political party with strict message control.

Should be fined into oblivion...

[Assmasher]

...the only way a social media company can maintain a sense of decency is to be a private company. Publicly traded companies are required, by law no less, to seek ever greater and greater revenue. Google has done an AMAZING job of straddling this line (and sometimes going past it) - but it'll get them eventually too.

Re:Should be fined into oblivion...

[ShanghaiBill]

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.

Re:Should be fined into oblivion...

[Anonymous Coward]

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.

Re:Should be fined into oblivion...

[rtb61]

Fine, mister anal retentive, corporate executives with stock options have an extremely powerful incentive to inflate unsustainable revenue to the point of collapse, to raise short term share price as much as possible beyond the option price, exercise those options and sell just as fucking fast as possible, before the corporation explodes from extremely bad short term decision making. Do you like the reality better, is was just the polite way to express the idea about maximising SHORT TERM profits and fuck the future, that is some one else's problem after the psychopath corporate executives have moved on or at the very least picked up their golden parachute.

"Friendly Fraud"

[WCMI92]

Just like Facebook's "privacy" settings. On Facebook privacy is not seen to be in the interest of the collective, Comrade.

Phone companies

[DidgetMaster]

Kind of like how the phone companies will do nothing to stop all the Robocalls, spam calls, and scammers from faking their caller ID. They don't want to hurt the revenue coming from those sources. Who cares about their regular subscribers. At least with Facebook, you are not paying for anything (unless you are stupid enough to give them your credit card info). I log on to Facebook about twice a year. I can't go that long without using my phone.

Re:Phone companies

[Comrade Ogilvy]

Yup.

When I was a kid, we took phone calls seriously, and would jump to pick up the phone to be polite to the caller. That (perhaps overzealous) enthusiasm was a valuable social contract.

4 years ago, I turned off the ringer on my landline. I was getting 20x as many spam calls as real human beings that I know. I was even on the Do Not Call Registry already.

Now I have a new phone service that came with the fiber, and it filters out most spam, but I still leave my ringer off. I get emailed a note if someone leaves a message -- nothing but spam so far.

Nobody but a business answers their phone when it is a stranger. We just ignore unless a text comes in first, explaining why we should pick up. But we will eventually read the transcript of the message maybe.

The phone companies have successfully destroyed a huge amount of goodwill around their product. Gone.

Re:Phone companies

[Comrade Ogilvy]

That is an interesting point. We will have an address for our mobile computer, but there is no logical reason it has to be a phone number or email address. That is an artifact of the phone cell system as we know it. Obviously "8G" or whatever that then exists will have to track mobile computers by some means, but messaging, voice, video will be registered to some service on the cloud that will do necessary forwarding.

I guess that is a question: Under the hood, what does these cell services use? What is actually necessary?

Re:"Friendly Fraud" - Nobody say Drumpf?

[Anonymous Coward]

You're trying to pretend FB has a... Communist motive, instead of a blatantly shamelessly robber-baronly Capitalist motive and execution, including selling out our national elections and lying to Congress about it?

One thing about the Soviet/Chinese Communists... they don't go outside the family like that. They realize they shit where they eat.

When the truth hurts your business

[Anonymous Coward]

There may be a problem with your business.

You mean not a company at all!

[Anonymous Coward]

By a company, you mean a for-profit one, right? One that will die or be eaten if another on makes more profit for long enough? One that hence will put profit above everything, to beat the others who prioritize profit higher than they do?

That kind of private company? ...

How about just having a standardized protocol? With federated servers and clients written by anyone who adheres to the protocol?
Like e-mail, or IRC or XMPP or news groups or file sharing networks or everything that came before the inner-platform anti-pattern paragon called the "modern web" / web 2.0 / HTML5.

Crank privacy laws up to 11

[Anonymous Coward]

Inalienable privacy rights would cause facebook to bleed to death, but better still, nothing like facebook could ever grow back.

Social media is cancer that should never have been allowed to spread for 15 years.

Re:Crank privacy laws up to 11

[Anonymous Coward]

Social media is cancer that should never have been allowed to spread for 15 years.

Says the dood posting on an anti-social media site.

Karma

[jrumney]

Documents related to the case were placed under seal because Facebook successfully argued that releasing them to the public could harm its business.

I don't see the issue with Facebook's business being harmed because of the actions revealed in those documents. I'm glad the court eventually saw sense and unsealed them.

Re:Karma

[dk20]

This.

why do companies get to do bad things, then hide it? If they were concerned around the public opinion here, why not do the right things instead?

Re:Karma

[srmalloy]

I must not have ethics. Ethics are the revenue-killer. Ethics are the little weakness that brings total bankruptcy. I will face my ethics. I will permit them to pass over me and through me. And when they have gone past I will alter my marketing to increase margins. Where my ethics have gone there will be nothing. Only profits will remain.

Teenage girls have confirmed: Facebook is dying

[jrumney]

Last week I was sitting next to two teenage girls on a 3 hour flight. During part of their conversation, one was talking to the other about someone else who had messaged her, then got upset when she didn't reply.

You know, I haven't even opened Facebook in like 3 months

Actually, now that you mention it, me neither

Who even uses Facebook anymore, anyway.

Yeah, I'm like too busy with living my life. It was taking up so much of my time, and for what?

Life is so much better without it, isn't it.

This went on for some time, as conversations between teenage girls tend to, and I can't bore you with the rest of the details, as I tuned out myself, but clearly Facebook has lost this target audience.

Re:Teenage girls have confirmed: Facebook is dying

[mentil]

Facebook is now for seniors who WISH they could be busy living their lives.

Re:Teenage girls have confirmed: Facebook is dying

[squiggleslash]

I'm really surprised Facebook (and eBay) doesn't have a cloud service offering like the other big tech companies. They should have the hardware experience and infrastructure for it.

I'm not, would you trust them with your data?

Google vacuums up data about Internet users but it has a good record on not sharing it with third parties. Their cloud offerings are limited and you know exactly how they could be abused.

Amazon has little incentive to violate your business's privacy, yes, they use your purchase and Amazon browsing history to make recommendations, but they have never - to the best of my knowledge - strayed out of that zone, so third parties have little reason to believe they'd be abusive.

Facebook has a record of selling extremely confidential data to the highest bidder, and has shown zero scruples when it comes to privacy. No corporation in their right mind is going to trust them to host anything.

Re:Teenage girls have confirmed: Facebook is dying

[rtb61]

People are reminded this all of the time, Zuck: They "trust me", Zuck: Dumb fucks https://en.wikiquote.org/wiki/.... A leopard, or slimey cunt, do not change their ways. Facebook have a history of faking subscriber numbers pretty much from it's conception, this has been reported on before. Stupid enough to use Facebook, well from the CEO's own mouth, you are a 'DUMB FUCK' and we should mock you (fool me once shame on me, fool me twice shame on me) and mock you and mock you some more (if you use facebook).

Re:Teenage girls have confirmed: Facebook is dying

[thomn8r]

clearly Facebook has lost this target audience.

You clearly don't understand Facebook's "target" audience: everyone. Every [man|woman|genderfluid|otherkin|*] - which is why they've infiltrated so many other platforms to slurp in their data, whether they actually use the facebook app/site or not.

we don't understand Facebook

[crgrace]

Well obviously you guys don't understand Facebook!

https://gizmodo.com/mark-zuckerberg-thinks-you-dont-trust-facebook-because-1832040327

If a company acts so badly that...

[rnturn]

... its customers find that, after getting the run-around, their best recourse is to take the company to court for a remedy, perhaps those details ought to be made public and the company deserves to have its business harmed a little. That would, at least, give the rest of us the opportunity to decide whether we want to begin or continue dealing with that company.

Zuckerberg is Sick

[BoRegardless]

Making these decisions is just rapacious behavior & FB runs the risk of users just melting away. It won't happen until it takes money right off the bottom line in their quarterly reports, though.

Sounds Like RICO Time

[crunchygranola]

When a group of people who are profiting from fraud, and are aware of it, get together and decide to take no action so that they can continue to profit, that sounds like a criminal conspiracy.

subject subject subjetc

[Falos]

Was it that much money?

I'm genuinely asking. If it was a significant amount, I can at least understand the reasoning behind discreet indulgence. Conversely I'd expect a corporation to be disinterested in pocket change, if it risks brand image.

If it wasn't that much money, it suggests corporations have a strong confidence in keeping their transactions to their chest, their laundry hidden, are willing to compromise the "customer" for even small gains.

If it WAS that much money, it's just good old american capitalism morals and I don't need to recalibrate my predictions.

Say it isn't so

[JustAnotherOldGuy]

Facebook cheat people? ME SO SHOCKED, SO VERY VERY SHOCKED

(and fuck your all caps filter error, give me a break.)

Greed is NOT good.

[dbreeze]

1 Timothy 6:10 KJV - For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

Facebook is identity theft

[WCMI92]

A massive scheme. If the truth were required in the URL it's address would be, "steammyidentityandemptymybankaccount.com"