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Democratic Senators urge Federal Trade Commission to take on Facebook over ‘friendly fraud’

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Two Democratic U.S. senators called for the Federal Trade Commission to act on a complaint filed by consumer groups against Facebook Inc on Thursday that alleged the company scammed children into spending money on its platform.

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

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

The documents disclosed that Facebook employees referred to the practice as “friendly fraud” and called children who racked up thousands of dollars in charges “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 shouldn’t take another settlement for Facebook to meet its ethical obligation to protect kids and families on its platform,” Senators Edward Markey and Richard Blumenthal said in a statement.

They said Facebook dodged their questions on the issue, posed to Chief Executive Mark Zuckerberg in a letter last month after the documents were unsealed.

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“Facebook’s answers to our reasonable questions were inadequate and do not inspire trust,” they said.

Facebook said in a statement that it had mechanisms in place to prevent fraud and provided dedicated resources for refund requests related to purchases by children.

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“We want people to have safe and enjoyable gaming experiences on Facebook, so providing resources to seek refunds for unauthorized purchases made in games is an important part of the platform,” the statement added.

In its prior response to the lawmakers, Facebook said it never encouraged anyone to engage in friendly fraud and had incentives to resolve complaints directly with users to avoid credit card companies’ chargeback fees.

The senators said the company failed, however, to explain why it did not act on widespread complaints before the case went to court and declined to answer specifically when Zuckerberg became aware of the issue.

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

The FTC is already investigating disclosures that Facebook inappropriately shared information belonging to 87 million users with the defunct British political consulting firm Cambridge Analytica.

Reporting by Katie Paul; Editing by Cynthia Osterman and Peter Cooney

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Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.



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Before Trump eyed Greenland: Here’s what happened last time the US bought a large chunk of the Arctic

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Editor’s note: Reports that President Donald Trump has urged aides to look into buying Greenland make us think of the last time the United States bought a major territory in the Arctic: the purchase of Alaska from Russia in 1867. Two years ago, we asked William L. Iggiagruk Hensley, a visiting professor at the University of Alaska Anchorage, to write about that historic sale.

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CNN’s Jake Tapper confronts Trump adviser Navarro with long list of experts calling him a disaster

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In a highly contentious interview on CNN's "State of the Union", host Jake Tapper confronted Donald Trump's top economic adviser, Peter Navarro, with a seemingly endless list of economists, analysts and business publications who believe he and his economic advice have both been a disaster and that he is not being straight with the public.

After refusing multiple times to concede that President Donald Trump's trade war -- and accompanying tariffs -- are having any effect on an economy that many financial prognosticators believe is headed towards a recession, Tapper confronted the White House adviser with the list of his critics -- including the Wall Street Journal.

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Internet goes wild over ‘obviously drunk’ Larry Kudlow on Fox News: ‘He’s lying while slurring his words’

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Speculation was rampant on Sunday that White House economic adviser Larry Kudlow was drunk on Fox News.

"There is no economic recession in sight," Kudlow insisted to Fox News Sunday host Dana Perino.

Twitter, however, was buzzing about Kudlow's speech patterns instead of his questionable economic optimism.

"Pretty sure Larry Kudlow is drunk on my TV right now... And he is lying while slurring his words," one Twitter user noted.

"Kudlow is on fox news Sunday right now and from my 30 yrs of tending bar, I gotta say this guy appears drunk," another user observed.

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