Published On: Tue, May 3rd, 2016

Amazon Liable for Kids’ Unauthorized In-App Purchases


(Image: WikiMedia)

Amazon has been found liable by a federal court for charging parents whose kids made unauthorized in-app purchases on a range of electronic devices. The court agreed with the Federal Trade Commission in a case that has extended from 2014 to the present.

The central issue is whether Amazon’s app store made it too simple for kids, without the permission of their parents, to buy virtual goodies with real money inside games that are marked as being  “free,” reports Andrea Peterson for The Washington Post.

In 2011, when the Amazon app store was opened, the organization received thousands of complaints from parents about charges in games made by their youngsters that had not been approved by them. The FTC began seeking refunds for consumers.

The reason the issue was deemed unfair is because the charges made on the apps were not well enough explained to purchasers.

Now the in-app purchase interface has been changed, and additional parental controls have been included, says Amazon, according to court files. The company also says it refunded the purchase costs to those who contacted them.

A ruling by a federal judge granted the FTC a summary judgment that found Amazon responsible for repaying the erroneous charges.

“[W]hile entering a password linking her Amazon account to a new device, a reasonable consumer unaware of the possibility of in-app purchases would not assume she was authorizing unforeseen charges,” U.S. District Judge John Coughenour wrote in his order.

FTC Chairwoman Edith Ramirez applauded the ruling. However, the court has not yet disclosed how much the tech giant will be required to pay.

Coughenour also granted a “partial summary judgment” for Amazon. Since the company had already taken steps meant to correct the condition, the judge did not accept the request by the FTC for “injunctive relief” that would have mandated that Amazon collect more explicit consent for in-app acquisitions.

Other tech companies have faced this same issue but settled out of court. In 2014, Apple compensated users by paying consumer refunds of roughly $ 32.5 million. Google resolved the same problem by paying refunds of $ 19 million.

Wendy Davis, writing for MediaPost Communications, says that Amazon announced that it provided refunds to customers who complained about the inadequately explained in-app purchases. But Coughenor rejected that statement.

“It was Amazon’s stated policy not to provide refunds for in-app purchases and so many customers would have reasonably believed such recourse was not available to them,” he wrote.

He continued by explaining that the time consumers had to spend to seek the refunds “constitutes additional injury to them.”

Another segment of the ruling points out that 1,573 authenticated customers sought refunds and did not receive them. Coughenor says he will review damages later.

Internet law expert Eric Goldman, a professor at Santa Clara University, said major companies today appear to be more professional than to use trickery to get purchases within a free app.

In January 2015, according to Katie Marsal of AppleInsider, Apple, Google, and Amazon settled with the Italian government over “misleading” in-app purchase costs. Italy’s Antitrust and Competition Authority did not charge the companies in exchange for the parties not using the word “free” to describe applications with in-app purchases.

IACA explained at the time in a statement:

“Consumers can now count on stronger guarantees than what would have been achieved by sanctioning the companies involved.”

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Grace Smith

Grace Smith

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