Facebook’s New Payment Terms Confirm New “Merchant” Program

Facebook has just posted new proposed Payments Terms of Service to the Site Governance page that confirm the coming new developer “merchant” program. Just two weeks ago, Facebook told us that it was beginning an “alpha test” to integrate its virtual currency with Facebook Platform applications.

We’ve read the new Payment TOS and FAQ, and here are the parts that discuss Facebook’s new merchant program.

From Section 5.4 on Disputes and Reversales:

5.4 If you enter into a transaction with a third party and have a dispute over the goods or services you purchased we have no liability for such goods or services. Our only involvement with regard to such transaction is as a payment agent.
5.5 We may intervene in disputes between users concerning payments but have no obligation to do so.

From the Payment Terms FAQ:

Q: I bought something and now I don’t like it, whom at Facebook can I complain to?

If you do not like something that you bought, you should talk to the merchant—just like you would in the real world. In some cases, we will be the merchant, and we will work to address your concerns. In other cases, if we are not the merchant, we encourage you to try to work things through with the merchant. However, if you are not able to work things through with the merchant, we want you to tell us so that we can evaluate the situation as well. In addition, if you paid by credit card, you may have chargeback rights as well.

“We drafted new terms in order to simplify all of our payments-related terms by bringing them together in one place and to give us the flexibility to try new features,” says Joe Sullivan, Facebook’s lead counsel for product.

Currently, users buy Facebook credits (Facebook’s virtual currency) in the Facebook Gift Shop in order to buy virtual gifts to send to their friends. Facebook has also done several tests in recent months around birthday gifts and holiday gifts on user profiles, and recently also started experimenting publicly with a new credit gifting system that allows users to give virtual credits to each other as a reward for sharing good content.

In the alpha tests that Facebook will start running soon, users will also be able to use Facebook credits to make purchases inside Facebook Platform applications and games. Developers (i.e. “merchants”) who accept Facebook credits will subsequently be reimbursed by Facebook for the currency spent in their applications. For more background on the Facebook payments and monetization ecosystem, see our Q1 2009 report.

The new terms are up for a comment period until Saturday, per Facebook’s new TOS revisioning process, and replace Facebook’s current Terms of Sale.