SCAMMERS ON FACEBOOK

Every day tens of millions of people log on to Facebook, the popular social-network site, and spend time playing goofy online games. But watch out. Some people playing these games are getting fleeced by scammers, tricked into signing up for products and services they didn’t want.
Worse yet, this isn’t happening by accident. The companies that develop games for Facebook make big money by selling ad space—some of it to scammers.
This week, Silicon Valley blogger Michael Arrington caused a ruckus by suggesting that Facebook itself has been turning a blind eye to the scams because it is sharing in the spoils. Arrington, who runs the influential TechCrunch blog, is on a crusade to pressure Facebook to clean up its act.
“Ultimately this is Facebook’s fault,” Arrington says. He says the social-networking site isn’t enforcing its own rules against scam ads. “It’s like with Major League Baseball and steroids. If the rules aren’t enforced, which is what’s happening on Facebook, then people are going to break the rules. Facebook needs to stop this.”

Facebook denies Arrington’s charge. In an exchange via e-mail, David Swain, a company spokesman, tells NEWSWEEK that Facebook works hard to stamp out scammer ads and has already disabled two ad networks that were breaking the rules.

“We have, and will continue to, move aggressively to stop any activities that threaten or damage our users’ experience,” Swain says. “Any assertion to the contrary is false.”
Arrington responds that Facebook isn't doing a good-enough job, because when he checked out FarmVille, a popular Facebook game, "it took me about 10 seconds to find really scammy ads."
Facebook is the hottest site on the Internet, and it's growing like mad. The site has more than 300 million users, adding 50 million in the third quarter alone. Earlier this year Facebook board member Marc Andreessen said Facebook would rake in more than $500 million in revenue this year.
Facebook CEO Mark Zuckerberg announced in September that it had become “cash-flow positive” well ahead of schedule. It had expected to hit that milestone in 2010.
Facebook is booming because it’s a wonderful and useful Web site. But it also represents a ripe target for scammers. Here’s how they operate.
Let’s say you’ve signed up to play FarmVille, a game produced by Zynga, a company in San Francisco. Each month some 63 million people play the game, in which you plant seeds and harvest crops.
If you want to buy things in FarmVille, like seeds or land, you can either earn points or you can buy points. To buy points, you send Zynga some money from your credit card. Yes, people really do spend money buying seeds for an online game. I have no idea why.
There’s also another way to earn Zynga money: you can click on ads that promise to give you FarmVille currency if you perform some task, like filling out a survey.
You might take an “IQ quiz,” for which you answer a few questions, and then, to get your score, you must enter your cell-phone number. The scammers send a PIN number to your cell phone, and tell you to enter that PIN on a Web site.
In the fine print, there’s a message saying that by entering your PIN you are signing up to get a daily horoscope for $9.99 per month. Next time you get your phone bill, you’ve been stung.
When first contacted by NEWSWEEK, an exec from one company that distributes these ads claimed they’re totally legitimate. “There is no way a user can inadvertently sign up for anything,” said Matt McAllister, marketing director at Offerpal Media, an ad network in Fremont, Calif. “They have to opt in for it.” McAllister points out that this is nothing new. “These ads have been around for years.”
Two days after that conversation, however, Offerpal announced that its CEO and founder, Anu Shukla, would be stepping down. McAllister said her resignation had nothing to do with the charges about scammy ads. But then her replacement, George Garrick, posted a public statement admitting that "regrettably, Offerpal has been guilty of distributing offers of questionable integrity." Garrick vowed that the practice would stop.
It’s true that scam ads have been around for years. But one thing that is different about Facebook is that users share a lot of personal data with the site. This means scammers can create especially insidious ads, using software programs that dynamically insert your personal information—your name, the name of one of your friends—into the ads that you see. So a naive user might think the ads are just messages from Facebook, especially since scammers sometimes use the same typefaces and colors as Facebook does.

Better yet, scammers don’t need victims to hand over a credit-card number. All they need is a mobile-phone number. Guess who’s on Facebook? Millions of naive teenagers who may not have credit cards, but do have mobile phones. Cha-ching.