Social gaming company Zynga and networking site Facebook have both been named in a class action lawsuit

12:35 (BST)
23/11/2009
Zynga faces class action suit over misleading advertising
following the alleged use of advertising which users say was false and misleading.

The suit, which is being handled by Sacramento-based law firm Kershaw, Cutter and Ratinoff, seeks upwards of USD 5 million in damages, claiming that "over the past four years, Zynga and Facebook have generated enormous profits through these false and misleading special offers."

"...Facebook is fully aware of the false and misleading nature of the advertising promulgated through Zynga's applications and [...] despite this, it actively engages in promoting Zynga's game to the public," reads the suit, published by Valleywag.

Zynga reportedly makes around one third of its revenues from cost-per-action advertising, which is estimated to amount to between USD 33-84 million per year for the company, and the lawsuit claims that Facebook shares "a substantial portion" of this revenue.

FishVille, Zynga's most recent Facebook title, was recently briefly removed from the site for featuring cost-per-action advertising.

The ads allegedly trick users into signing up for unauthorised phone charges or expensive mail order products. They are called 'free trials' but one plaintiff claims she faced a USD 165 charge on her phone bill for 'free' items delivered to her that she is unable to return or obtain a refund for.

Zynga CEO Mark Pincus has claimed on his blog that the company has been unable to control the ads in its games because they're managed by partner companies, but that it has now removed them.

"We recognise it is our responsibility to ensure that offers which generate a bad user experience are not shown with any of our games. Therefore, we are removing all CPA offers across Zynga games until we can control their inclusion and presentation ourselves."

However, a video of Pincus admitting, "I did every horrible thing in the book just to get revenues," is expected to be used a courtroom evidence.

Last week it was reported Zynga had raised more than USD 15 million in funding, in addition to the USD 40 million it had raised in two previous funding drives last year.