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FTC sues Amazon because children used mobile apps to make purchases without parents’ okay

FTC sues Amazon because children used mobile apps to make purchases without parents’ okay

The FTC wants consumers to get refunds for the unauthorized charges and in the future prevent Amazon from billing parents.

Amazon has been sued by the Federal Trade Commission (FTC) because children used mobile apps to make purchases without parents’ approval.

The popular online company let children charge millions of dollars to their parents’ accounts through in-app purchases via the company’s app store.

Often, the purchases are connected with mobile games so children can play at a more advanced level. For instance, children can spend real money on “coins” and “acorns” in “Ice Age Village.”

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” FTC Chairwoman Edith Ramirez said in a statement.

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The FTC wants consumers to get refunds for the unauthorized charges and in the future prevent Amazon from billing parents.

"We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases," Ramirez said. The complaint was filed in U.S. District Court in Washington State.

Concerns about parents getting charged were noted back in 2011 in Amazon internal communications and were “…clearly causing problems for a large percentage of our customers.”

Then, in March 2012 Amazon required the account owner to enter a password for individual in-app charges over $20. But children could still make an unlimited number of individual purchases of less than $20 without a parent’s approval.

Before changes were eventually made, thousands of parents complained to Amazon about in-app charges made by their children. They totaled millions of dollars. One girl was able to spend $358.42 in unauthorized charges.

The FTC had proposed a settlement whereby refunds would be sent to consumers and the app store would no longer be able to let children make unintentional purchases, according to The Wall Street Journal.

Privacy advocates, such as Jeffrey Chester, executive director of the Center for Digital Democracy, are concerned about Amazon's actions. He said the company not settling with the FTC illustrates how it "places making money over the interests of its customers."

"As Amazon gears up to release a new phone, and expands its impact on the mobile industry and consumer rights, the FTC’s complaint should serve as a wake-up call for better corporate ethics,” he told The Washington Post.

In response to the issue, Andrew DeVore, Amazon’s associate general counsel, wrote in a letter sent to the FTC that the company’s actions "were lawful from the outset and…already meet or exceed the requirements of the Apple consent order."

Earlier this year, Apple settled a similar complaint with the FTC. It was to pay $32.5 million in refunds to customers, according to InsideCounsel, and was to implement password protection.

"We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn't want we refunded those purchases," DeVore added in the letter.

In a related matter, The Los Angeles Times reported how Google was named in a class-action lawsuit in March by parents over unauthorized charges for in-game apps.

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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