Amazon sued by FTC over in-app purchase policies – Mobile World Live

Amazon sued by FTC over in-app purchase policies

11 JUL 2014

The US Federal Trade Commission (FTC) sued Amazon for policies in its Appstore that have previously seen children reportedly spend “millions of dollars” on in-app purchases without parental permission.

The lawsuit is seeking refunds from the company to parents that have seen large bills racked up on their credit cards due to the unchecked spending of children.

It also wants Amazon to change the process by which purchases can be made in the Appstore, “permanently banning the company from billing parents and other account holders for in-app charges without their consent”.

FTC chairwoman Edith Ramirez said: “We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents’ consent for in-app purchases.”

Amazon Appstore offers apps for Android devices, including its own Kindle Fire tablet range. It is company policy that all in-app charges are non-refundable and parents who have sought exception to this rule have faced a confusing process to secure refunds, according to the complaint.

One of the main problem areas is freemium apps aimed at children that are free to download but which enable in-app purchases of digital items via an associated credit card. Tap Zoo and Ice Age Village were cited by the FTC as games in which this has commonly taken place.

Amazon introduced passwords for purchases of $20 or more in March 2012, extending this to all purchases in 2013. However, purchases could still be made for up to an hour after a password was entered, leading to unauthorised purchases by children. It wasn’t until June 2014 that Amazon required passwords for each individual purchase.

According to the complaint, internal communications between Amazon employees showed an awareness of the issue from as early as December 2011.

Amazon said last week that it would defend its approach in court, arguing that it has already met or exceeded the terms imposed on Amazon around the same issue.

Amazon’s associate counsel Andrew DeVore wrote that the FTC threat to sue leaves Amazon with “no choice but to defend our approach in court”.

In a similar case settled in January, Apple agreed to pay $32.5 million to refund account holders who had seen unauthorised charges made on their cards from children purchasing items in the App Store. The iPhone maker also agreed to change its billing practices to require parental consent from parents with in-app spending.

It was reported this week that Apple approached the FTC about Google’s practices after the regulator cracked down on the iPhone maker’s rules around paid apps and in-purchases in relation to the spending by children.

Author

Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

Read more

Related

Tags