Amazon resists FTC demands over child in-app purchases

The online retail giant is fighting FTC demands over in-app purchases -- and may end up in court to defend itself.
Written by Charlie Osborne, Contributing Writer on
Screen Shot 2014-07-03 at 10.17.28
Amazon's Kindle Fire tablet, marketed as a family-friendly device.

Amazon is resisting demands placed by the FTC to change its policy to cover unauthorized in-app purchases by children.

The online retail would rather face a lawsuit brought forward by the US Federal Trade Commission (FTC) than accept policy changes and fines related to children using their parents' accounts to make in-app purchases. In a letter to the FTC, Amazon said it was ready to "defend our approach in court," and insisted that fines, additional record-keeping and new disclosure requirements over the next 20 years were going overboard.

In short, Amazon's done enough, and we'll see you in court.

In documents reviewed by the Wall Street Journal, Amazon was asked to accept terms similar to those Apple agreed to earlier this year related to in-app purchases. There have been cases where children have used their parent's accounts to make in-app purchases, and without supervision or the parent's knowledge, these bills can end up in the thousands. Some account owners have complained to app providers and received refunds; others have not been so successful.

Apple agreed earlier this year to refund approximately $32.5 million to customers as part of its FTC settlement, of which funds were distributed to consumers.

The question the FTC faces is whether firms like Apple and Amazon can be held ultimately responsible, or whether it is up to the parents to make sure in-app purchases are not part of games that children play on their mobile devices. Whether the tech firms are accountable or not is up for debate, but the regulator wants to see them do more to prevent it happening — especially as they hold consumer credit card data which is linked to app accounts.

Andrew DeVore, an Amazon associate general counsel said in a letter to the FTC:

When customers told us their kids had made purchases they didn't want, we refunded those purchases. [Amazon's app store] includes prominent notice of in-app purchasing, effective parental controls and real-time notice of every in-app purchase.

However, the US regulator says these notices need to be more prominent, and passwords should be mandatory for all in-app purchases. This could not only stop children making unauthorized buys, but will make refunds simpler. In a proposed complaint, the FTC said Amazon has "often has failed to obtain parents' or other account holders' informed consent to in-app charges incurred by children" since it began requiring consumers' informed consent for in-app purchases in June this year.

The regulator claims that thousands of consumers have complained about in-app purchases made without their approval, and sometimes the bill reaches hundreds of dollars. An FTC spokesman said:

The commission is focused on ensuring that companies comply with the fundamental principle that consumers should not be made to pay for something they did not authorize. Consumers using mobile devices have the same long-established and fundamental consumer protections as they would anywhere else.

Amazon letter to FTC by CNET News

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