Thread by @reveal

1/ Earlier this year, we reported that @facebook made millions by duping children into unwittingly spending their parents’ money on games.

Today, the company still hasn’t changed a key policy that allows this practice. revealnews.org/article/facebo…

2/ In January, we convinced a judge to unseal a trove of internal Facebook documents, which included memos, secret strategies and employee emails.

As @ewords reported, they painted a troubling picture of how the social media giant conducted business. revealnews.org/article/facebo…

3/ @Facebook employees were aware children were getting duped. Some of them developed a method that would have cut down on the practice. But the company didn’t implement it.

4/ Instead, @facebook encouraged game developers to let children spend money without their parents’ permission.

“Friendly fraud,” as employees called it in internal records. documentcloud.org/documents/5694…

5/ Employees also referred to some kids as “whales” – a term borrowed from the casino industry to describe profligate spenders.

6/ Today, we know that @facebook still allows game developers to run incredibly high chargeback rates – a little-known industry term that describes when people are forced to ask their credit card company for help getting refunds.

7/ High chargeback rates are a warning sign that a business might be defrauding its customers because so many people are seeking help to get refunds, according to the U.S. government.

8/ A chargeback rate of 1 percent is considered high, and anything over 2 percent is a “red flag” of deceptive behavior, according to the Federal Trade Commission. ftc.gov/system/files/d…

9/ Meanwhile, @Facebook’s payment policies show the company still permits game developers to run chargeback rates of 5 percent before it will penalize them.

Again: That’s *more than double* what the government says should be ringing alarm bells for potential business fraud.

10/ “Chargebacks create a bad experience for people on Facebook and for us. We keep records of these transactions, and Facebook’s overall chargeback rate for in-app payment transactions is well below the 1% guidelines set by payment card networks,” Facebook said in a statement.

11/ The 5 percent threshold astonished Karisse Hendrick, a chargeback consultant for Fortune 500 companies. “It’s amazing they’re comfortable with 5 percent and that they’re putting it in writing,” she said.

12/ We’re staying on this story.

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