Facebook bans offer providers Gambit and Tatto Media due to questionable ads

Facebook has banned offer providers Gambit and Tatto Media from providing offers in games and apps on the social network.

The development is one of the results of the recent scandal around the quality of offers in social games and apps. Some of the offers have been tainted as scams because they don’t tell consumers about hidden obligations or fees. Earlier today, Offerpal said that it was issuing a set of standards for its advertisers to follow in order to meet the highest ethics standards.

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":142483,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"A"}']

Tatto Media has had a history of problems with alleged deceptive ads, but Gambit has reportedly been trying to play by the rules. Facebook outlined the actions it was taking on Nov. 5, but it did not name the banned companies at that time. The reason was repeat violations of Facebook’s guidelines for offers. A spokesman for Facebook confirmed that the companies mentioned in the post were indeed Tatto and Gambit.

Curiously, Gambit said today in response to Offerpal’s announcement, “We at Gambit are really glad to hear that Offerpal is taking these steps. For our part, Gambit’s AdControl suite of tools has been in effect since the earliest days of Gambit, so we see this as great news because it validates our product development choices. … Because of the recent limelight on our industry, we think we can look forward to lots more announcements like this as more and more payments and offers companies realize that ‘monitor’ and ‘filter’ are key components to ‘monetize.’”

[Update: Here’s Gambit’s official blog post on this topic.]

Gambit has also addressed the scam issue in its own blog. Apparently, Gambit’s approach isn’t good enough for Facebook, which has begun cracking down on scam offers as a result of the controversy. Gambit hasn’t yet responded to our query about the Facebook ban. [Update: Gambit says the following, somewhat cryptically: Gambit is, and has always been, up and running on our clients’ applications on Facebook, MySpace, and many other venues online. We’re not happy that there has been news otherwise, and we are working to address the issue. We will be announcing the real story in days to come.]

The offer crackdown is serious, since Inside Social Games reported today that the offer business accounts for 30 percent of revenues in the $1 billion virtual goods business. And Inside Social Goods reported that as much of 20 percent of the offer business may be based on questionable promotions. Thus, the crackdown on Facebook and other social networks could have a significant slowing effect if all of the questionable offers are removed.

Offers are special ads that are used to monetize otherwise free social games on Facebook and other social networks. In an offer, a user will agree to sign up for a Netflix subscription or credit card offer. The business has been lucrative because the offers guaranteed some kind of direct benefit for the advertisers, who are willing to pay more. And these offers are appealing to gamers who didn’t want to pay for virtual goods with credit cards. Offer companies like Offerpal, Super Rewards, Gambit, Trialpay and others have been at the forefront of the industry.

But as with other online media, complaints arose that some offers were scams. The scandal ignited last month as Techcrunch editor Michael Arrington challenged former Offerpal CEO Anu Shukla over the legitimacy of most offers at the Virtual Goods Summit. Shukla said that less than 1 percent of the offers have generated complaints from users. But the ensuing debate led to changes in policy regarding offers at Zynga, RockYou, and other companies. Facebook renewed its crackdown on scams and actually stopped one of Zynga’s games, FishVille, from launching until Zynga removed controversial offers. Zynga has also stopped using offers until it could set up a system to properly vet them. Zynga is now in the process of restoring offers, using companies that include Offerpal.