Amazon.com and the FTC will be battling it in court over the next few weeks, as the FTC is accusing the company of knowingly billing parents with in-app charges that were authorized by children.
This according to a Federal Trade Commission complaint filed today in federal court.
The new FTC’s lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent. According to the complaint, Amazon keeps 30 percent of all in-app charges.
“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” said FTC Chairwoman Edith Ramirez. “Even Amazon’s own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents’ consent for in-app purchases.”
The complaint alleges that when Amazon introduced in-app charges to the Amazon Appstore in November 2011, there were no password requirements of any kind on in-app charges, including in kids’ games and other apps that appeal to children. According to the complaint, this left parents to foot the bill for charges they didn’t authorize.
According to the complaint, kids’ games often encourage children to acquire virtual items in ways that blur the lines between what costs virtual currency and what costs real money. In the app “Ice Age Village,” for example, the complaint noted that children can use “coins” and “acorns” to buy items in the game without a real-money charge. However, they can also purchase additional “coins” and “acorns” using real money on a screen that is visually similar to the one that has no real-money charge. The largest quantity purchase available in the app would cost $99.99.
The complaint highlights internal communications among Amazon employees as early as December 2011 that said allowing unlimited in-app charges without any password was “…clearly causing problems for a large percentage of our customers,” adding that the situation was a “near house on fire.”
In March 2012, according to the complaint, Amazon updated its in-app charge system to require an account owner to enter a password only for individual in-app charges over $20. As the complaint notes, Amazon continued to allow children to make an unlimited number of individual purchases of less than $20 without a parent’s approval. An Amazon employee noted at the time of the change that “it’s much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product,” according to the complaint. In July 2012, as set forth in the complaint, internal emails again described consumer complaints about in-app charges as a “house on fire” situation.
The complaint alleges that in early 2013, Amazon updated its in-app charge process to require password entry for some charges in a way that functioned differently in different contexts. According to the complaint, even when a parent was prompted for a password to authorize a single in-app charge made by a child, that single authorization often opened an undisclosed window of 15 minutes to an hour during which the child could then make unlimited charges without further authorization. Not until June 2014, roughly two and a half years after the problem first surfaced and only shortly before the Commission voted to approve the lawsuit against Amazon, did Amazon change its in-app charge framework to obtain account holders’ informed consent for in-app charges on its newer mobile devices, as explained in the complaint.
According to the complaint, thousands of parents complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges. For example, one mother noted in the FTC complaint told Amazon that her daughter was able to rack up $358.42 in unauthorized charges, while others complained that even children who could not read were able to “click a lot of buttons at random” and incur several unauthorized charges.
The company’s stated policy is that all in-app charges are final and nonrefundable. According to the complaint, even parents who have sought an exception to that policy have faced a refund process that is unclear and confusing, involving statements that do not explain how to seek refunds for in-app charges or suggest consumers cannot get a refund for these charges.
This is the Commission’s second case relating to children’s in-app purchases; Apple, Inc. settled an FTC complaint concerning the issue earlier this year. The Commission is seeking full refunds for all affected consumers, disgorgement of Amazon’s ill-gotten gains, and a court order ensuring that in the future Amazon obtains permission before imposing charges for in-app purchases.
The Commission vote authorizing the staff to file the complaint was 4-1, with Commissioner Joshua D. Wright voting no. The complaint was filed in the U.S. District Court for the Western District of Washington.
Related Posts
NFL Names Caesars, DraftKings, FanDuel as First Sports Betting Partners
Three major players will take your bets
Disney+ and ESPN+ Content Joins Comcast Xfinity Platforms
Disney and Comcast have reached an agreement to launch Disney+ and ESPN+ on Xfinity. The integration allows X1…
Fitbit Inspire 2 Now Works with Tile App
Tile is making it easier to find a misplaced Fitbit Inspire 2. Users will soon see a notification…
ESPN+ Content is Available on Hulu
ESPN+ on Hulu: It's now easier than ever to watch ESPN+ content because you can stream it right from the Hulu app.
Vudu to Launch on Amazon Fire TVs and Fire TV Devices.
The Vudu app will now be available on Amazon Fire TV Edition smart TVs and Fire TV streaming devices, with movies and shows to stream.
NCAA March Madness Live App now lets You Second-Screen on More Devices
NCAA March Madness Live App: Turner Sports updated the NCAA March Madness Live App, allowing users to second-screen on more devices.
Netflix Can Automatically Download Content for you to Watch Later
Netflix Downloads for You: Netflix's latest feature will automatically download shows and movies that you are interested in watching.
TikTok Celebrates David Bowie’s Birthday Adding Collection to Platform
David Bowie on TikTok: Warner Music Group, Sony Music Entertainment and The David Bowie estate reached an aggreement to honor the late performer.
HBO Max App Launches on Roku Devices and PS5
The HBO Max app is launching on Roku devices this week, and already launched on the popular PS5 from Sony earlier this week.
Apple Fitness+ to Launch on December 14th
Apple set a December 14th launch date for Apple Fitness+, its first fitness experience for the Apple Watch.
Rotten Tomatoes Tweaks ‘Top Critics’ Program for Inclusion and Modern Media
Rotten Tomatoes launched a new Top Critics program for its Tomatometer rating system, including new criteria that will increase inclusion.
Hulu’s ‘Watch Party’ Mode is now Available to Everyone
Hulu's Watch Party feature allows up to 8 viewers to watch shows and movies together while social distancing, is now available.
Amazon Pharmacy Launches Online, Hoping to Cut Prescription Costs
Amazon announced Amazon Pharmacy, offering to help customers purchase their prescription medications online.
Spotify’s Premium Holiday Offer Returns
Spotify's annual Premium holiday offer is back, offering ad-free music to enhance your holiday season.
Amazon Music Offers Ultra High Definition and 3D Audio Tracks
Amazon Music is remastering thousands of songs and albums to Ultra High Definition with 3D Audio Support
Disney+ adds GroupWatch Feature for up to Seven People
Disney+ announced a new GroupWatch feature on Tuesday morning.