Facebook is facing another class action lawsuit, this time from users who say they were scammed by misleading ads that show up in Facebook-sponsored games. Also named as a defendant is Zynga, the video game developer that provides the bulk of games featured on Facebook.
The plaintiffs say they were duped into handing over personal information in exchange for "cash" that could be redeemed while playing games like "Mafia Wars" and "Farmville." A number of Facebook games feature "virtual currency" that can be used to reach new levels of the game or buy tools necessary for optimal success. Players can earn cash by achieving certain benchmarks or buying it outright with actual money.
There is also a third, less taxing route: some prominently placed ads feature "special offers," in which players participate in a short exercise with the hope of receiving virtual cash for their efforts. One example cited by the plaintiffs is an "IQ test" that requires consumers to provide their cell phone number; participants are told that their score will be sent to them via text message.
In reality, however, they have "subscribed to a useless SMS service" and will now receive a monthly charge for their efforts. These charges are small enough that consumers often don't become aware of the scam, but if they do, they "are met with hurdles as they attempt to cancel the service and/or obtain a refund," according to the suit.
Zynga came out of nowhere to become one of the worlds premier game developers. Founded in 2007, the company now has over 200 million users, and provided six of Facebook's 10 most popular games last month. But despite its impressive rise and continuing popularity, almost a third of the company's revenues come from "commercial offers" like those targeted in the suit.
Moreover, the suit offers some juicy self-incriminating evidence from the mouth of Zynga's CEO. In a speech last spring, Mark Pincus admitted to pushing shady ads on consumers in an attempt to turn a profit. Pincus said that when he started his business, "I needed revenues right [expletive] now ... So I funded the company myself but I did every horrible thing in the book to, just to get revenues right away."
He went on to admit that a toolbar forced on consumers in exchange for "poker chips" is impossible to get rid of once it's been downloaded. The plaintiffs cite this speech in their complaint and indicate that it will be a key piece of evidence in an eventual trial.
The plaintiffs, represented by Sacramento-based Kershaw, Cutter & Ratinoff, are seeking damages, attorneys' fees, and a permanent injunction. The suit alleges violation of the Unfair Competition Law, violation of the Consumers Legal Remedies Act, and unjust enrichment.
The suit comes during a moment of respite for Facebook, just two months after the social-networking king settled another ad-related class action. That suit concerned Facebook's "Beacon" system, which tracked and recorded users' consumer activity, in some cases posting it to their "news feed" for the entire online world to see.
Facebook discontinued the system as a result of the suit, with company spokesman Barry Schnitt confiding that the company "learned a great deal from the Beacon experience."