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Democratic senators urge FTC to act on Facebook ” friendly fraud practices

SAN FRANCISCO (Reuters) – Two U.S. Democratic senators called for the Federal Trade Commission to act on a complaint filed by consumer groups against Facebook on Thursday, claiming the company defrauded children in the spending of money on the platform.

FILE PHOTO: Two women take pictures in front of the entrance sign to Facebook headquarters in Menlo Park, California, on Wednesday 10 October 2018. REUTERS/Elijah Nouvelage/File Photo

A coalition of consumer groups asked the FTC to investigate whether Facebook had engaged in deceptive practices, claiming the company lured children into making in-game purchases without the consent of the parents.

The social media company settled a class-action lawsuit over the issue in 2016, but more details came to light last month after a request by the Center for Investigative Reporting resulted in the unsealing of the court documents.

The documents showed that Facebook employees referred to the practice as “friendly fraud” and called the kids who racked up thousands of dollars in costs “whales”, a term commonly used in casinos to describe high-spending gamblers.

“We urge the FTC to review in detail the complaint that was filed today on this issue. It may not be a different scheme for Facebook to meet the ethical obligation to protect children and families on its platform,” Senators Edward Markey and Richard Blumenthal said in a statement.

She said Facebook dodged their questions on the issue, said CEO Mark Zuckerberg in a letter last month after the documents are unsealed.

“Facebook’s answers to our reasonable questions to ask, are insufficient and do not inspire trust,” they said.

Facebook was not immediately available for comment.

In the earlier response of the legislature, the Facebook don’t explain why they are not acting on widespread complaints before the case to the judge and refused to answer, especially when Zuckerberg was aware of the problem, the senators said.

Facebook is facing a slew of lawsuits and regulatory inquiries over its record on privacy, security, and the use of the platform by groups spreading misinformation.

The FTC is already investigating revelations that Facebook inappropriately shared information of 87 million users, with the now-defunct British political consulting firm Cambridge Analytica.

Reporting by Katie Paul; Editing by Cynthia Osterman

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