Well that didn’t take long. We outlined the not-so-ethical ways that the big social gaming startups are generating revenue through lead gen scams and subscriptions through a series of posts over the last week. Starting with Social Games: How The Big Three Make Millions and Scamville: The Social Gaming Ecosystem Of Hell. We also threw in some comments by other companies and a former scammer, and a quote from Zynga that 1/3 of their revenues come from offers, much of which are scams.
We thought this would be a fight that would take months to end successfully, and we thought that only Facebook or MySpace would make the move to clean up their own platforms.
But boy am I surprised today to see Zynga, the worst of the offenders, admit publicly to the problem and take quick steps to change. CEO Mark Pincus says:
Michael Arrington posted over the weekend about CPA offers within social games and questioned why facebook, myspace, zynga and others would expose these to our users. He raises good points about ‘scammy’ advertisers and the bad user experience they create. I agree with him and others that some of these offers misrepresent and hurt our industry.
Later in the post he also says:
We have worked hard to police and remove bad offers. In fact, the worst offender, tatto media, referenced in the techcrunch article, had already been taken down and permanently banned prior to the post. Nevertheless, we need to be more aggressive and have revised our service level agreements with these providers requiring them to filter and police offers prior to posting on their networks. We have also removed all mobile ads until we see any that offer clear user value.
At zynga, we have faced a similar challenge in providing customer support to millions of users of our free games. Six months ago we were overwhelmed with our ticket volumes and faced an F rating with the better business bureau. We made massive efforts to address this, getting our maximum response times for live email and phone support down to 72 hours and raised our rating to a B+. Even today we realize our customer support isn’t at the level our users expect and we continue to work on it.
Hats off to Zynga. Flat out admitting that the problem exists and taking early steps to fix it is just something you don’t see from most companies. While Offerpal’s CEO (why coincidentally and humorously has 666 Facebook friends) takes an offensive “shit, doubleshit and bullshit” denial strategy, Zynga’s CEO just stepped up to the plate and hit the ball out of the park. He also just self regulated before Facebook or MySpace could even respond.
There may be hope yet for the Internet.
Great journalism, TC.
Let’s just hope the impact won’t fade when this becomes a non-headline issue. Scams come in waves…
The LinkedIn one, where people scrape groups and then message all users asking them to apply for a scam job? That would be a nice one to cover. Juris Informatica was doing that sort of LinkedIn thing to get around things, hide their scam by not allowing commenting and trying to circumvent the job posting fee by LinkedIn. They are also creating bogus accounts to do that.
But that’s not much different than other spam methods…
Just bad news for LinkedIn if it becomes prevalent.
I wonder what Anu Shukla would be feeling like at this moment.
Perhaps that she dug a hole for herself by swearing and throwing the fits when she could have easily escaped this shitstorm by providing a calm and plausible response.
It’s not improbable for her network to be axed by number of publishers any moment.
Agreed. Nice job uncovering a wrong and seeing it righted so quickly. Also, hat’s off to Zynga for the quick response.
That’s the power of journalism. keep it up.
I am republishing a comment posted by “matwel” at InsideSocialgames.com.
The comment raises some very valid doubts about Pincus’ sincerity. I also get a feeling that he is being really smart about this. He is playing down the scope of the scam and at the same time pretending to be the good boy and getting all the good PR.
Absolutely agree. TC is the hero.
Great, Hats off to Michael The Great Crusader!!!!!!!!
+1 for those supporting TC’s journalism on this. Great work! Informative, entertaining and a force for good.
Please can we have more of this on TC instead of the 4 New Gmails Skins! and Build 0.84937546 of Chrome for Mac Now Available posts.
Thanks, Zynga.
Oh please. It seems “successful” startups these days operate this way.
Apply scammy/spammy practices. Grow big/profitable, destroy the competition and then publicly repent… saying they really didn’t mean it.
Another practice that is common is the practice of spamming addressbooks. A LOT of second tier social networks use it… most notably Flixter. And predictably, once they’ve gotten big, they act all nice and discontinue it.
And don’t talk to me about Facebook and MySpace and their shady founding histories.
Can anyone succeed on the straight and narrow these days?
Anyone succeeding on the straight and narrow? I’m afraid, not. Just when some crook “comes clean”, the cycles repeats. Thievery at a corporate level.
Has anyone ever succeeded (I mean in the 10’s of millions of $) on the straight and narrow?
Awesome!
….the beginning of the end? Could it be?
I am not surprised that Zynga and i imagine the others will quickly and swiftly make the same proper moves to abolish the scammy ads… why shouldn’t they ?
Why shouldn’t they? Umm, because scammy ads make them tons of money?
Wow! Well Done Michael
no, it’s well done Pincus. They’re presumably taking a short term revenue hit in exchange for long term viability.
Mr Arrington, learn to pause, take a compliment and enjoy it. Three seconds after, you can go ahead and continue the battle.
Nice one!
Hats off to both since your series was the catalyst.
i don’t think you have the entire story here. should look into facebook’s part in the matter.
Come on Michael. I don’t think there should be any applauding of Zynga whatsoever. They got caught with their hand in the cookie jar and are taking precautionary measures to save face. If they give all that $$$ they gained from spamming users, then they deserve admiration.
I think Anu forgot to say one more shit : “Oh shit!”
+ 1000000000
Did you guys see Peanut Labs survey on this topic?
http://peanutla...-to-cpa-offers/
Yeah I was happy to see Zynga respond so quickly.
Kudos.
Although I am not really sure how “one third” is equal to “a small minority of our revenue”.
But I suppose it is the end result that matters, quotes on the interwebs is a crazy thing.
that’s because it was obviously not one third.
btw. zynga uses offerpal offers
Just raises an eyebrow when one founder says one thing, and another says something else! But, thats beside the point, in this case, I suppose.
Don’t want to diminish this, because I think it was fantastic to respond so quickly and directly.
Well done to zynga nice to see they take critisism seriously
Even if Zynga is changing their ways, and I’m happy if they are, I’m suspicious that this will have much of an impact. The other scammy games will just pick up the slack. It’s like expecting drug trafficking to vanish because one user has found God.
I think the only way to successfully deal with the problem is for Facebook to come down like a ton of bricks on the apps that profit from this. Something like “We noticed that your app is a scammy piece of garbage. You have one week to fix this, or we will shut down all of your apps.”
Exactly. Facebook should have a 1 strike policy. if you are caught using scammy “survey” ads, your app and your company is banned from Facebook. Period, no second chances.
I think a one strike is a bit harsh – you have to allow for change of heart so I’d go for a 3 strike policy – companies can take as long as customers to find out they are doin’ it all wrong.
Why? Any scam against a customer reflects poorly on Facebook. Users are oblivious to how the games work. They know them only as “facebook games”. I would give developers a short grace period 72 hours to either remove all offense content or take their games offline until they have it removed. Then let it be known that going forward there is a 0 tolerance policy against any and all scams.
Zynga wouldn’t be large if they did not include these lucrative, scammy ads from the start. It’s easy to say now that they will cut things back after they have almost certainly secured a natural monopoly on the market (the other two you mention are in the running too, but the incumbents aren’t going anywhere). I doubt any would be here if ethics mattered from day one – It’s unfortunate.
should i also mention that the continuous shifts in facebook’s policies about spamming applications were enforced more than once because of zynga’s tactics and continuous spamming? definately not because of playfish
I ve worked for a company that made it into incubation this summer. Unfortunately it gained 2 millions users. A lot of bad practices were done like sending notification to friends without the app, filtering CA users so that FB engineers would not notice that and so on.
Not my cup of team, i quit about a month ago but FB social gaming is pretty much a jungle. I hope one day it will mature otherwise it would be better die
“Not my cup of team …”
Very likely a typo but I like it anyway, I think I’ll use it.
My hat’s off to TC.
Now THIS is what journalism is supposed to do!
Expose abuses & apply pressure for positive change.
Good job, y’all.
Please continue to use your influence in this industry to be an advocate for what’s right.
Hats off to you for forcing the issue!
It’s amazing how they call Tatto media “offenders”, yet they were the one’s who knowingly and willingly profited with them.
Hypocrisy at its best.
Great news to be sure, I expected something along these lines from Zynga and Mark.
yes. suddenly zynga, the worst copycats and spammers of facebook became the good guys. great job
+1… Now that Zynga is in the #1 spot…entirely due to copying, spamming, and profiting from scams… NOW they take the highroad.
It’s certainly better than nothing…but to praise a company for no longer stealing from its users — that’s a bit of a stretch.
Michael – Correct me if I am wrong, but are you defending Zynga?
Zynga is responsible for the rise of Offerpal and Tatto, and benefited the MOST from them.
Why are you calling out Anu and Lin Mao when Mark should be getting the heat? I actually think Anu and Lin Mao deserve a lot of credit for pioneering the business.
Anu and Lin merely served the ads. Zynga said “Give me all you got” and wanted even more from their revenue share. Why are you defending the white man?
I have to say the worst offender is Mark Pincus. You should not be defending Mark. You should be defending players who are playing in bounds and not out of bounds.
Jameson
Zynga aren’t as much to blame because they have been influenced by the Ad/affiliate networks – it’s them that allow the rubbish on. If all the networks are in bed with the trash then in for a penny in for a pound – you might aswell cream as much cash as you can if they are all as bad as each other.
However Zynga do have the power to move to another advert company – that gives them power over what their users are subjected to.
So if they are being proactive – and getting better (clear terms, easy opt out) deals for their user base, they are the good guys – they are only bad if they ignore it and fail to fix the problem.
They can act as role models for others
Great point. Mike Arrington is seen by most of the VC world as a biased source, and unreliable.
Look how he sucks up to Max Levchin yet a few months ago Slide was all offer driven.
Well done Mike, way to be a true journalist.
I won’t say that Zynga is responsible for the rise of Offerpal. Offerpal has been used by top social apps way before Zynga’s. Li’l Green Patch, Friends For Sale, and Vampires were among the early Offerpal customers.
Just to be clear. The above comment (http://www.tech...comment-3071878) was posted by an impostor. The comment does not reflect my view or opinion on the topic.
This is what news/media/journalism should be. A voice for people creating change. Good to see our tech journalist doing their job!
Tip Of The Hat for cleaning up their act.
Wag Of The Finger for waiting until after they got caught.
A smaller wag for the company’s CEO to be so lazy in his writing that he cannot even capitalize the name of his own company on his own blog post. Sure, he’s a young entrepreneur, but that’s no excuse to write official-ish statements like a pre-teen on his Facebook wall. Come on people! Why does this no longer matter!?
Arrington (TC) is an authority in IT field. Zynga chose to listen, good for them.
as for that offerpal ceo, i still cant believe that shit, double shit, bullshit line…. is she lonely or something?
that was a “call to action” statement!
Let’s not congratulate them. Their hand was forced. If the opportunity presents itself, they’ll gladly find another way to scam their customers in the future and then when they get caught, admit a problem and promise to fix it.
time now for mint.com to remove all those scammy credit card offers….
Michael should point out that Zynga’s other illegal business is online gambling.
Selling poker chips to kids is the big elephant.
And I should online gambling was illegal.
Zengas Texas Holdem Poker is a rip off. As above stated players must buy chips and can never cash them in. As players we know this. What they do not tell the players is that they use” robots” as players to fill tables. The robots are programmed to win and win big taking chips back on a “HUGE” scale. Zenga is racking up big time. Seems to me this should be illegal or something.
Um-you must be really bad at poker then…Zynga poker is the easiest “money” around
1) You don’t have to buy chips. I believe you start with $2K, my account is around ninety-eleven-billion now because everyone there sucks ass. Never bought a chip with real money.
2) Did you really expect to be able to “withdraw” your money. Nowhere does Zynga even insinuate this is possible – they are a game company, not a casino. Do you expect to withdraw money from Yahoo’s online poker?
3) If Zynga is employing robots in their poker room, I’d like to offer them my services as a developer. Those bots are stuck in an infinite loop of suck. Regardless of that fact, even if there were bots, I don’t care – I just want to play poker to kill some time.
With Offerpal’s pants down I too would step behind them if I were Pincus
Facebook’s advertising guidelines for platform developers actually prohibit this “incentivized” style of advertising entirely. They don’t really enforce that policy yet but i guess they could easily choose to do so whenever they wanted.
see section 13a here:
http://www.face..._guidelines.php
Well done, Michael.
And hats off to Zynga. This will probably cost them, in the short term, but shows vision for the long.
I am loving every moment of this saga. And I’m serious. (More than you can imagine).
In a perfect world. consumers would always know what they’re getting into.
But the line between persuasion, deception and idiotic is often times thinner than we would like it to be. Mass-marketing is not always a noble place and/as it is not written for the finest minds.
If you want to start a war against its tactics, then I believe you should dig deeper. This is just scratching the surface. Those companies (might) deserve the blame for their practices (all of them: from FB to the ad networks to those who make revenues out of those offers). Still, the principle applies. If it’s a one time shot, how does it help address the real issue?
Hell to scammers? Yes, Those IQ Quizzes and their clones have corrupted the Premium SMS business in a way that might be irreversible.
But I’m also curious to understand why TechCrunch attacks them, and then defends Cash4Gold as a viable business. ( your post: http://www.tech...dly-profitable/).
How are most application expected to crack down on these ‘fraudulent’ offers though. It’s fine for Zynga with there massive turnover and large staff, theyhave the resources to be able to weed them out and can also afford to ‘play it safe’
For the majority of us we are battling with small teams and low budgets and it’s simply not viable for us to individually vet every offer.
And we can’t play it safe as every dollar counts when we have to battle ‘theives’ like Zynga who ride on our initial success to launch a clone which they can then just outspend us.
Finally some if the offers which users declare as fraudulent are often perfectly legit. As with most things you have to read and understand what’s expected but often with these offers people actually rush through them without Reading. This can lead to problems such as no payouts or further communications that you didn’t agree to. That’s not saying there aren’t truely fraudulent ones, there are just like banner ads are riddled with fraudulent and misleading ads and no-one likes these as they hurt us as much as the users in the long run.
Byt we rely on the offer companies to do their job and make sure that the offers they approve meet a high level. If they don’t then it’s not just the users of the offer that suffer but also the apps.
So – I’m confused, Pincus/Zynga decided to take the high road and not sue everyone?
Pincus is a good dude. I’m glad he moved swiftly.
I am slightly confused.
So here is how I see it, the industry -not just Zynga- have been ripping off customers in terms of not protecting them from their partners.
Pounding their user base with scumbag offers and profiting from it and now they say “ah yeah, that is messed up we will stop that” and that is cool?
The issue here is:
1. Michael was an outsider uncovering this, these guys have been in the business since day 1 and they knew from the first time they seen a video professor ad that something was wrong there. So it is not like MA was telling them something THEY did not know. They got caught with their hand in the cookie jar.
2. Patting them on the back is silly, they are not sincere, it is like me being caught taking money from your wallet, you catching me and me saying “you know what? I think it is wrong that I have been ripping you off, I am going to stop now. Can you now please administer a pat on my back”. Gimme a break.
3. Facebook needs to look after this, it is their ecosystem and these guys are just part of a sub-ecosystem.
Don’t get me wrong, I really appreciate TC doing this story, I think it is the best series I have ever read on the site to date.
Why would Pincus do anything other than what’s in his best interests? Simply put, he wouldn’t.
It’s highly likely that writing a soft piece about how he respects policy is what’s best for him, today, in hopes of squashing a mini PR storm.
And, it could be that actually enforcing some of what was mentioned will be in his best interests, tomorrow, because if he does not, Facebook will throw a fit, the FTC will sue him, and his IPO empire will shrivel and flat line.
And, it could be that being the most aggressive and ruthless developer on the Facebook platform (who never developed anything original, and would stomp on anything competitive he saw via spending all the “dirty money” earned from the offers he’s now denouncing) was exactly what was in his best interests, yesterday.
So, Pincus did just hit a homerun. But the homerun was converting you from the author of scamville into a personal Pincus-business-practices advocate.
There aren’t a whole lot of things I care about personally in business. Business is, after all, business. But to those who have staked their livelihoods on the Facebook platform the past two years, I assure you — this is disappointing.
i don’t really care what zynga does to fix the situation. i used to play vampire wars ALL the time and quit because of the absolute lack of customer service and attention. i think i’ll wait to see what chris and aber have cooking to start up with the online social gaming again. thanks for your article and efforts in reporting. it’s good to see you are creating IMMEDIATE benefits for us. i’m totally proud of you, michael arrington.
anu shukla’s vulgar performance really shocked me. if you lie down with dogs, you wake up with fleas. i appreciate MA and TC for blowing the doors open on FB, as well. what a sleazeball operation.
Zynga has presumably retained a crisis management firm to position a previous decision based on economics or liability as an olive branch. If they were serious, they would actively engage users with a clear opt-in process whereby some kind of lead qualification would serve the interests of legitimate advertisers.
I’m not as sanguine as Michael Arrington that “There may be hope yet for the Internet.” Shady practices have always paved the way in gold rushes. The internet gold rush is just beginning and so are the shady practices.
It won’t change anything. Money is money and those companies are losing money right now
@arrington Did you base your (well executed, and praised quest) on my earlier post @thenextweb? See video: http://www.vimeo.com/7094506
I’m happy you picked it up and succeeded, but was curious if you based it on our story from 18 days ago.
I think this is being done just to calm down Arrignton a bit for a while… So Arrignton, this is just not the end of the fight against scammers… Way to go.. Anyways I have started to realise the power of blogs…
Kudos to MA for taking on this issue and getting quick results! Absolutely no praise for Zynga though. They have no choice at this point! Of course, they are going to go straight now that the light has been shined. But they have benefitted for far too long from these unscrupulous offers. And the arrogance of OfferPal’s CEO is absolutely shocking! After a truly tasteless tirade, Anu is ready for her “Oh shit!” moment, Mr. De Mille. I can hear her now: “I AM big, it’s the offers that got small!”
Why do you believe him?
Zynga is still making shit tons of money on these scams, they just threw Arrington a bone to try to appease him. Come on folks, wake up. Pincus is a PUNK. These social gaming companies making 100 million are SHILLS.
its like a 17 yr old kid in the ghetto driving an escalade with 20″ rims. do you think he actually bought it with his allowance for being a good boy?? I don’t think so.
Mark Pincus continues to show leadership in this, his third successful venture. It’s true that the company did reap tremendous profits from these scammy ads, but when exposed, he did the right thing from both a PR and business perspective. He continues to be the web 2.0 CEO I would most like to have a beer with.
Michael, kudos for bringing such attention to the scam issue and for triggering action. Much confusion has arisen across the media from the echo of your points. Here’s an attempt to clarify:
* Scams are not generated by the gaming companies themselves but from the third party suppliers of marketing offers that allow players to gain virtual points without having to pay for them.
* Offering free points to players for filling out surveys, signing up for newsletters, etc is not a scam nor is it unethical business in principle. What is a scam and absolutely unethical is asking for mobile phone numbers as a way to sneak-in a monthly subscription fee to the unaware user.
* As reported by Zynga, about 1/3 of its revenue comes from offer suppliers. To understand what impact scams have on a gaming company’s business, the more relevant figure would be the percentage of that 1/3 that are scams.
Clearly everyone in the supply chain needs to recognize the issue of scams and eliminate them by doing their part in vetting the advertisers: Facebook, the gaming companies and the third party offer suppliers. Well done Pincus for being the first to act.
For a well balanced reaction to the debate check out http://www.insi...n-social-games/
For a brief analysis of the success of social gaming companies check out http://digitalp...-social-gaming/ (disclaimer: I wrote it.)
I like to play the games on my pc my console and on my cell phone..
this article was related to games & also related to technology and i had also hobby to search gadget and latest gadgets and many more so this article was really great in my opinion.
I’m all for defeating these scammers (I HATE those surveys and offers)…but I also don’t understand how everyone thinks Zynga or FB will continue to operate their businesses without that ad revenue or resorting to some sort of pay-for-service plan….because it’s being proven regular legit advertising dollars just won’t cut it. I’m just asking what you think a legitimate, viable alternative is going to look like?
They are doing NOTHING to improve customer service. Someone hacked into my paypal and used ti to try and purchase $150.00 worth of chips or something from them. Paypal caught it, but I have a “pending” charge in my account.
This was 11 days ago. I contacted zynga to get it removed… they sent two form letters demanding I provide them with credit card information, and after contacting the BBB I finally got a personal reply from an “Amber”, asking for screenshots of my paypal account (what, like I’m lying?) I replied, giving them everything they asked for, and a day later got an email saying they hadn’t heard from me and were assuming my problem was solved.
This is FRAUD, not “OMG WTF I didn’t get teh car I wuz sposed to get in mob dudes online!!”, yet they are unwilling to help.
There needs to be a criminal investigation into this company.
I agree there needs to be a criminal investigation into this company. If they did via mail, it would be mail fraud.