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Facebook Once Again Under Fire for In-App Purchases Made by Children

A coalition of 17 privacy and children’s organizations has asked the Federal Trade Commission to investigate Facebook for allowing children to make unauthorized in-app purchases.

“This is really straight-forward,” said Jim Steyer, CEO of Common Sense Media, a children’s advocacy group that signed the complaint. “The FTC needs to do its job and protect families and kids, and Facebook needs to stop these practices.”

The coalition filed a complaint with the FTC on Feb. 21 over Facebook doing little to stop children from buying virtual items through games on its service without parental permission and, in some cases, without realizing those items cost money. The complaint was fueled by recently unsealed documents related to a 2012 class action lawsuit by consumers against Facebook over the same matter.

Internal memos show that between 2010 and 2014, Facebook encouraged children, some as young as five-years old, to make purchases using their parents’ credit card information, the complaint said. The company then refused to refund parents, created a complex complaint system to deter refund requests, and rejected recommendations to prevent what it called “friendly fraud.”

The new complaint says the original class action lawsuit, which was settled in 2016, did not address the potential violation of the Children’s Online Privacy Protection Act, which requires that online services obtain parental consent before collecting any personal information about children younger than 13. The complaint also claims that the terms of agreement didn’t require Facebook to stop the unauthorized purchases nor refund the consumers who were or will be affected. It also points out that the settlement agreement expires in May 2019.

After the internal documents were released, Facebook issued the following statement: “Facebook works with parents and experts to offer tools for families navigating Facebook and the web. 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.”

But the new complaint claims the updates weren’t enough. Instead, the organizations say Facebook merely expects minors to get permission from their parents for in-app purchases without actually verifying that the children did. If children nevertheless make a purchase without parental consent, parents must request a refund. Additionally, the complaint says Facebook isn’t required to offer prominent disclosures to parents alerting them about the possibility of children charging items on their credit card.

The complaint, also signed by groups including the Center for Digital Democracy, Electronic Privacy Information Center, and the Consumer Federation of America, comes as Facebook works to settle privacy violations with the FTC over recent mismanagement of user data. In 2016, British political consulting firm Cambridge Analytica harvested Facebook user data in an effort to influence on the U.S. presidential election. Any settlement may cost Facebook billions of dollars.

“There’s a pattern of behavior here that needs to be looked at,” said Steyer. There’s a need for “a fundamental change of culture.”

The FTC has already resolved several cases involving other companies related to unauthorized purchases by children.

In 2016, a federal judge ruled against Amazon in a lawsuit over surprise in-app charges by children. Amazon agreed to refund parents’ money, which totaled more than $70 million.

Prior to Amazon, the FTC reached settlements with Google and Apple related to in-app charges incurred by children. Those settlements resulted in refunds totaling more than $50 million.