Facebook and Zynga are facing a class-action lawsuit over their 'scam' advertising strategy. It's alleged that they 'cheat' users of games like Farmville and Mafia Wars. In IT Blogwatch, bloggers re-arrange the furniture to watch the show. By Richi Jennings.
November 20, 2009.
Your humble blogwatcher selected these bloggy morsels for your enjoyment. Not to mention changed... Ryan Tate wags the dog:
Facebook and Zynga are the defendants in a federal class-action lawsuit filed Tuesday, which seeks upwards of $5 million for social network users scammed in online game ads. ... Kershaw, Cutter & Ratinoff has been looking for victims of scammy ads in games. ... Less than a week later, the firm's suit has hit federal district court in Northern California. Patrick Hoge adds:
Neither gaming startup Zynga nor social network Facebook actually originates the advertisements in question; instead, other companies take out ads in Zynga's games. Some of the ads trick users into signing up for unauthorized cell phone charges or expensive mail-order products. ... Zynga reportedly takes in close to one-third of its revenue from "commercial offers" like those, and Facebook does well too.
[The] federal class-action lawsuit that seeks upwards of $5 million for users allegedly scammed in online game ads, quizzes and offers. ... Facebook spokesman Barry Schnitt said Facebook did not profit from the ads as the lawsuit states, and it would fight the suit "vigorously." Facebook, Schnitt said, has taken multiple steps in recent months to block deceptive advertising, banning four ad networks in the past several months. Erik Syverson IAL:
The lawsuit cites as evidence a video of Zynga co-founder and CEO Mark Pincus speaking at a Berkeley event in which he did "every horrible thing in the book just to get revenues right away" in order to get to profitability. ... [It] was filed on behalf of Santa Cruz resident Rebecca Swift, who claims that she was repeatedly charged $9.99 after she provided her cellphone number to a Zynga advertiser, and she was charged $165.85 after she tried to cancel a "trial offer" of green tea products.
Suffice to say, it looks like Facebook needs to take a harder look at its business partners. ... Apparently, the ads are not only deceptive but incur real financial injury to consumers in the way of unauthorized and disguised charges. This problem will only continue to grow as websites like Facebook struggle to figure out how the hell to make money before their venture capital dries up. Meanwhile, Offerpal is racing to be the good guys:
George Garrick, who replaced Offerpal founder Anu Shukla two weeks ago as CEO, admitted the company had been "guilty of distributing offers of questionable integrity" ... and vowed to clean up the company's ad practices. But Eric Eldon offers this apologia; it's the users' fault, he says:
The company ... announced Thursday it had come out with a new set of advertising policies that forbid misleading or deceptive offers and provide guidelines for the type of offers they distribute. ... It has also adopted a multi-step review process before each offer goes live and put in place an automated system to continually verify ongoing offers.
How bad has the problem been, really? After all, low-quality ads for weight loss, teeth whitening, and a range of other dubious promises run in major ad networks and appear on prominent web sites all over the web. ... We believe that ... the majority of offers have not been deceptive, but rather legal and also low-quality. ... A meaningful minority of offers have been high-quality, and point the way forward for the concept of incentivized advertising. So what's your take?
It was not as if offer companies and developers said how can we scam users. Instead, many of the more legitimate advertisers who found their ads running within social applications also found themselves being burned by some users. A game player who wanted to get points didnt necessarily care about the offer, so theyd sign up for the offer, get the points, then cancel.
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| || ||Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. A cross-functional IT geek since 1985, he is also an analyst at Ferris Research. You can follow him as @richi on Twitter, or richij on FriendFeed, pretend to be richij's friend on Facebook, or just use good old email: firstname.lastname@example.org. |