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The problem of "adverse fraud"

Feb. 13, 2017 by Catherine Pope

The problem of "adverse fraud"

The children, as the senators call them, "were simply playing games that did not include any payment processing, and were therefore unable to make purchases without having to be physically present, in order to make purchases without knowing where they would eventually be charged."

"This is a particularly disturbing pattern of pervasive fraud that's led to parents becoming even more unwilling to pay for their own virtual children," the senators' letter said.

The problem is that the parents of the children in this case are likely already getting paid for playing games with them, according to the Senate's letter.

Parents who don't know where they will eventually be charged, or who haven't set up a credit card will have to pay $2,000 in penalties to the bank, according to the letter.

"Even if your company doesn't recognize this problem, it's still unlikely that you'll be charged for the fraud," the Senate's letter stated.

But this isn't the first social network to be charged with "hostile fraud" by its customers. The Electronic Frontier Foundation (EFF) recently identified  the largest social network in the world, which it called the "hostile fraud" problem.

The problem started when Facebook told kids to play games online. They didn't know any better, but it was too late. The new rules are "a clear signal that social networks are now in a position to be the victims of hostile fraud."

The EFF was "furious that Facebook didn't just tell parents to play games for free, but also to pay for it using a payment method that was also designed to do so. In other words, parents are still paying for an online version of Facebook that isn't part of their digital lives, and that's not the way the company has structured and managed the system they've set in place to make sure their kids' lives aren't destroyed," EFF lawyer Matthew Bostrom wrote in a blog post . "If Facebook had used a payment method that actually worked well for their parents, it would be at least as effective as this system."

The EFF also highlighted another problem with social networks: Facebook's "hostile fraud" policy doesn't allow the company to "host a credit card with your name on it."

"The fact that we've been able to point to several cases where social networks have been charged with 'hostile fraud' suggests that some of these practices remain in place