FTC sues Amazon over children's in-app charges made without parental consent

FTC sues Amazon over children's in-app charges made without parental consent

Summary: UPDATED: The FTC alleges that the in-app charges debate has been an internal struggle at Amazon for some time now, citing internal company emails referring to the situation as a "house on fire."

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Amazon is having a big morning for its app developers, but not everything is welcome news for the Internet giant.

The Federal Trade Commission filed a lawsuit against the Seattle-based corporation, alleging that Amazon wrongfully and illegally billed parents for their children's unauthorized in-app charges. The FTC estimated these charges are worth "millions of dollars."

The lawsuit cites that Amazon retails at least 30 percent of the proceeds from all in-app charges stemming from the Amazon Appstore.

After compiling together complaints from "thousands of parents," here is one case included in the lawsuit:

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.

FTC chairwoman Edith Ramirez argued further in prepared remarks, suggesting the gap between parental knowledge and children's actions on devices such as the Kindle Fire was internally referred to at Amazon as a "House on Fire" situation.

“Even Amazon's own employees recognized the serious problem its process created," Ramirez remarked, "We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

Amazon has made some moves to obtain cardholder consent on newer devices in the last year, and there are tips for turning off in-app purchasing from the Appstore.

But at this time, the retail behemoth's company policy is that all in-app charges are final and nonrefundable.

The FTC is seeking to change that -- much like the legal battle it underwent against Apple and similar charges made on apps sold through iTunes. In January, Apple agreed to refund at least $32.5 million to customers included in the complaint.

ZDNet has reached out to Amazon for comment, and we will update this post once we hear back.

UPDATE: Amazon stood by its response to the FTC penned last week by Andrew DeVore, vice president and assistant general counsel at Amazon. That letter is available in full below:

Amazon's Response to FTC

Topics: Legal, Amazon, Cloud, E-Commerce, Government US

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4 comments
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  • I'm guessing that

    if Amazon wasn't getting 30% of those sales, the password window would be open for 1 minute, not 1 hour.
    William.Farrel
  • Really?

    Why the hell should anyone have to tell the difference between an adult making a purchase, and an adults child who the adult has allowed to fiddle with their device despite a multitude of people telling the adult youre a complete idiot for allowing your kid to play with your device.
    Ive dealt with these adults, and they will regurgitate a million and one 'its not my fault, i have no control over what my 5 year old does' excuses, but not a single on has ever accepted any responsibility over their own child.
    Its about time parents took responsibility for themselves instead of relying on litigation to recover money their child HAS ABSOLUTELY SPENT WITH THEIR IMPLIED CONSENT BY ALLOWING THE CHILD ACCESS TO THE DEVICE CONNECTED TO A CREDIT CARD AND THE INTERNET IN THE FIRST PLACE
    Noneofyourdamnbusinesss
    • Didn't you know??

      Everybody but the parent is at fault.

      Who cares that they were the ones that gave an immature/irresponsible child a device without any kind of over-site. It is Amazon's fault that they were too busy yapping about nothing on Facebook while the kids were running wild with the device.

      I have a friend who tried to blame a telco because her kid was sending over 200 texts a day and downloading movies on a 250MB limited contract. She claimed that her kid would never disobey her, yet when I ask him to show me his phone, it was almost full with pirated torrents and had sent so many texts that day that none of the text in the history had a time tag from the day before (ie: reached the limit for auto-delete).

      Instead of being mad at her kid, she got mad at me for PROVING that his kid was guilty as charged.
      wackoae
  • Yes, really!

    Clearly, the people saying that it's the parent's fault for giving their children a "device" either do not have children, have never used Amazon, or both! The "device" that you speak of in my home is my TV used for streaming shows on Amazon.com. There is a separate section for children's shows, and YES, I allow my children to watch cartoons without supervision, as shocking as that might be for some. The way that Amazon app works is that once you are logged in, you can make in app purchases with just a click of a button. The way the shows are setup, one episode of a show might be free, while another, of the same show might not be.
    I taught my 8 year old and 5 year old that if there is any kind of price on any show, other than the word "Free", they are not allowed to click it without my permission. But I can certainly see how kids might do this without the parents even realizing.
    Apple seems to be handling this a lot better, because a password entry is required for every single app store purchase.
    Uncle_B