Facebook Friendly Fraud Lawsuit 

Cutter Law’s attorneys are proud to have been part of the lawsuit filed on behalf of children who were manipulated into spending money on Facebook games without their knowledge or permission. 

Too often, corporate greed takes the priority over following the law, and when that happens it is often up to the consumers harmed by those actions to come forward and hold these companies accountable.

We’re honored to stand by Glynnis Bohannon and her son to fight for justice and prevent corporations from exploiting minors for profit.

 

What was the Lawsuit About?

The Facebook “friendly fraud” lawsuit involved allegations that Facebook knowingly manipulated and induced minors into spending money on their parents’ credit cards without proper verification or authorization.

Court documents unsealed after the lawsuit was settled revealed a pattern of illegal behavior on Facebook’s part, including not offering proper refunds to parents whose minor children used their credit cards to make purchases through the social media network, and that Facebook referred to minors who spent thousands of dollars on games as “whales”—the same term casinos use for big-spending gamblers.

Glynnis Bohannon is the mother of one of the representative plaintiffs in the lawsuit. She had allowed her son to use her credit card to make up to $20 in purchases in a game called Ninja Saga on Facebook.

Later, when she opened her credit card bill, Bohannon was stunned to see charges of almost $1,000 related to the game. After watching her son play the game and checking her credit card, Bohannon realized that every time her son clicked on a stack of coins, her credit card was being charged, even though there was no opportunity to approve each transaction and no notification that charges were being incurred.

Bohannon attempted to reach Facebook to obtain a refund but found the process impossible so she decided to hold Facebook accountable through a lawsuit.

After the Facebook lawsuit was filed, it became clear that other parents were also in a similar situation to Bohannon, with massive credit card bills for purchases they did not authorize. Bohannon was joined by Julie Wright and her minor child, who incurred more than $1,000 in charges but only received a refund for $59.90

What Happened During the Lawsuit? 

Cutter Law attorney John R. Parker Jr. represented Bohannon, and he and a team of attorneys filed for class-action status.

During the filing, the plaintiffs requested the courts unseal Facebook documents that the company argued were confidential but that held important information for the lawsuit that the public should have been able to access. The court agreed to unseal some documents, but not all.

The plaintiffs argued that Facebook knew certain transactions were coming from accounts held by minors but refused to offer refunds to parents whose credit cards were used, in violation of the California Family Code.

Furthermore, Facebook knew that minors believed they were using virtual currency rather than real money when they made the purchases.

In 2016, the lawsuit settled. Under the settlement, Facebook agreed to review its practices regarding how it manages refunds for minors and their parents as part of the Facebook settlement.

Facebook also agreed to bring its refund practices and policies regarding minors into compliance with the California Family Code and change the language regarding its payment terms and refunds. 

What Happened After the Lawsuit?

After the case settled, there was a change in the law that governs what documents in lawsuits should be public.  Accordingly, Reveal from The Center for Investigative Reporting filed a motion requesting that certain sealed documents from the lawsuit be made public. The court agreed to do so, and the 135 pages of unsealed documents revealed that Facebook knew minors were using parents’ credit cards.

The company had a phrase for this—”friendly fraud”—and encouraged game developers to allow children to do so in order to increase profits.

Furthermore, Facebook employees also knew many minors were not aware they were spending real money and did not know their parents’ credit card numbers were stored.

Although some Facebook employees sounded alarms about the practice—and one developed a system for preventing children from unknowingly using their parents’ credit cards—Facebook declined to use the system and focused its efforts instead on making sure authentication procedures did not disrupt its stream of revenue from children spending money on games.

The Center for Investigative Reporting also found that 9 percent of the revenue from children was clawed back by credit card companies (a practice in which a credit cardholder requests the credit card company obtain a refund for fraudulent charges).

The Federal Trade Commission reportedly considers a 2 percent chargeback rate a sign that a company is engaged in deceptive business practices. 

Since The Center for Investigative Reporting’s analysis was released, two senators wrote a letter to Facebook demanding answers about the company’s actions regarding encouraging children to use parents’ credit cards.

Consumer Protection Attorneys 

Attorneys at Cutter Law have extensive experience fighting on behalf of consumers who have been misled, exploited or manipulated by unethical companies looking to increase their revenue.

We’re proud to hold those companies accountable for their actions and to obtain justice for the people whose money is illegally taken. Lawsuits filed by our firm have not only resulted in financial compensation to victims but also in policy and procedure changes at high-profile organizations, such as those seen in the Facebook lawsuit.

If you or someone you love has been victimized by corporate greed, you deserve an attorney who will advocate ceaselessly for you. Contact us today for a no-obligation consultation.  

Personal injury and civil justice attorney Brooks Cutter is a leading advocate for consumer justice and protecting the rights of the severely injured. Brooks founded Cutter Law, P.C., with offices in Sacramento and Oakland, with…

Facebook Friendly Fraud Lawsuit 

Subject: Letter of Recommendation

5/5

Marilyn and I just want to commend the Cutter Law team for doing an excellent job representing us in our dispute with a major international company.

John Parker, Esq. took our case involving a rather complicated electronic product design flaw and researched our legal options. He then drafted a strongly worded lawsuit document that convinced the other party that they should try to negotiate instead of going to court. A desirable settlement was reached that was exactly what Cutter Law said they would do for us.

Throughout the entire process the Cutter Law team was professional and always available to update us on the progress of our case.

Marilyn and I highly recommend Cutter Law for anyone in need of legal representation involving a product, especially if it relates to bringing a class action lawsuit.

We cannot thank the Cutter Law team enough for resolving our case.

Sincerely,

Clay & Marilyn M.
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