Friday, Nov. 06, 2009

Are You Getting Scammed by Facebook Games?

By Belinda Luscombe

Facebook games — Mafia Wars, FarmVille, Restaurant City — have become surprisingly effective at diverting time wasters among the social-networking crowd. More than 63 million people alone play FarmVille. But now accusations have surfaced that the games can lead some more gullible players, including children, into Internet scams, especially if they have a cell phone.

Here's how it works. You join FarmVille, a game on Facebook in which you can create a virtual farm by growing crops and livestock and tilling the earth. Through your toil, you earn virtual money, but to farm more efficiently or quickly, you can also invest real cash (through PayPal or a credit card) to buy virtual goods, such as seed or a tractor. Should you not have any real cash to spare on things that after all do not actually exist, you can instead accept an offer from one of the advertisers on the game site and get virtual cash in return. (See the top 10 Internet blunders.)

These offers, generally known in the business as lead-gen (lead generators), will give you some seed/tractor money in return for signing up for, say, a subscription to Netflix or a credit card. But less scrupulous advertisers lure players in with an offer to take a bogus survey or IQ test. Once it's completed they require a cell-phone number to send you the results. When you enter your cell number and create a password, you have unwittingly subscribed to a service you never wanted but will be billed for. If you're a kid, the mysterious charge then appears on the phone bill of the parents, who often find that phone companies will not cancel services from a third-party provider — even if the parent cannot find out who that provider is. (See five Facebook no-nos for divorcing couples.)

Will O'Brien, general manager of social and casual games at TrialPay, a company that matches advertisers with potential online clients, told the San Francisco Chronicle that offers to swap personal information for virtual cash are designed to reach the young because they're less likely to have a credit card. But they often have cell phones, usually on their parents' plans. Indeed, while Facebook rules state that users must be at least 13, FarmVille seems to be aimed at a youthful crowd, at least by its marketing pitch: "Howdy Ya'll! Come on down to the Farm today and play with your friends ..."

The issue came to a head on Nov. 1 when the blogger Michael Arrington of Tech Crunch confronted some of the advertising providers at a virtual goods summit with accusations of scammy behavior. He blogged about it and also managed to find a former social-networking ad executive who admitted that the industry knew that not all the ads were on the up-and-up.

Mark Pincus of Zynga, the largest and most profitable of the social-networking game companies, (it created FarmVille, Mafia Wars and Cafe World) was quick to respond. "I agree with [Arrington] and others that some of these offers misrepresent and hurt our industry," he wrote on his blog. "We have worked hard to remove bad offers ... Nevertheless we need to be more aggressive and have revised our service-level agreements." He also took down all offers that involve sending a mobile-phone number. Offerpal, the biggest provider of offer advertising, also apparently responded quickly, replacing CEO Anu Shukla, shortly after a video of her confrontation with Arrington surfaced. Other game developers said the accusations amount to nothing more than the rants of an attention-hungry blogger. (Read what happens to your Facebook profile after you die.)

According to the Better Business Bureau of Greater San Francisco, 222 complaints have been lodged against Zynga in the last 12 months. But most of these have not been about advertising scams, and Zynga has raised its BBB rating to a B+ from an F. Offerpal has a B rating. Industry figures suggest that roughly 90% of social-networking game players neither spend any real money nor click on any ads. And Facebook and MySpace say they monitor all applications closely and have suspended companies that violate its advertising protocols. In the last several days, both companies have revised their guidelines to be more stringent. (See the 10 worst video game movies.)

But clearly there's reason for caution. Other Internet entrepreneurs have piped up about the issue. James Hong, who co-founded Hotornot.com, said that even back in 2005 he'd stopped taking the kind of offers that ask for cell-phone numbers or a subscription. "The offers that monetize the best are the ones that scam/trick users," he wrote on his blog. "Sure we had [legitimate] Netflix ads show up ... but I'm pretty sure most of the money ended up getting our users hooked into auto-recurring SMS subscriptions for horoscopes and stuff."

All in all, might be just as well to earn virtual cash the old-fashioned way: by playing for it.