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Lawsuit says ads in social games are scamming players

By (Legal News)

Gamers are crying foul play over what they claim are misleading ads on social games.

A class-action lawsuit last month highlights what thousands of consumers say are bogus offers tied to social games available on Facebook and other social networks. The 16-page lawsuit, filed in U.S. District Court in nearby Sacramento, details how Rebecca Swift, a 41-year-old self-employed resident of Santa Cruz, Calif., was lured into accepting two "special offers" from advertisers to gain extra game credits for YoVille, a popular virtual-world game developed by Zynga.

More than $200 was illegally charged to Swift's credit card over several months, the lawsuit alleges. It seeks compensation from Facebook and Zynga for Swift and thousands of others, says attorney John Parker, who represents the plaintiff.

Zynga had no comment on the lawsuit.

It claims 90% of its revenue comes from user purchases of virtual goods. Zynga says 1 million users purchase goods each month.

Facebook says the ads came from third parties, but it takes the issue seriously. It called the lawsuit frivolous and without merit.

The lawsuit illustrates the kerfuffle over misleading social-gaming ads that have frustrated consumers and scared away legitimate advertisers, who do not want to be lumped with scamsters, says Alex Rampell, CEO of TrialPay, an online payment and promotions service.

Social games are among the hottest things going online. Millions have flocked to Facebook, MySpace and elsewhere to play free games that test their wits and skills against friends.

But to gain entry to new levels of the game, an undetermined number of players unknowingly are signing up for special offers. Some of those offers, such as an IQ test and green tea offer that Swift agreed to, automatically charge the game player.

The stakes are particularly high for Zynga, which draws more than 100 million visitors a month and is eyeing a possible initial public stock offering next year. Industry estimates peg its annual revenue at $100 million to $250 million, of which $33 million to $84 million may come from these "special offers," the suit claims.

Full post as published by Legal News Post on December 07, 2009 (boomark / email).