amazonThe Federal Trade Commission has sued Amazon for charging parents for unauthorized in-app purchases made by their children. In a lawsuit filed in the U.S. District Court for the Western District of Washington, the regulator is seeking a court order requiring Amazon to refund all unauthorized charges made through its Appstore, as well as an order that would prohibit the company from charging for unauthorized purchases in the future.

The complaint outlines a long history of allegations about Amazon’s in-app purchase practices. According to the complaint, the company began allowing Kindle Fire tablet users to make in-app purchases without entering their password when the capability first launched in 2011, making it easy for kids to rack up massive in-app purchase bills.

Just a month after the launch of in-app purchases, an Appstore manager said the policy was “clearly causing problems for a large percentage of our customers,” according to the complaint.

Amazon changed its policies in 2012 to require a password for any in-app purchase over $20, and then changed its policy again in 2013 to require a password for all in-app purchases. The system implemented in 2013 opened up a window between 15 minutes and 1 hour in length that allowed children to make purchases without entering a password. In June, Amazon changed its policies to provide people with more guidance about when an in-app purchase window will open, right as the FTC was mulling whether or not to authorize its lawsuit.

In addition to the problems with opening purchase windows, the FTC said in its complaint that getting refunds from Amazon was incredibly difficult for consumers. The company’s stated policy is that all in-app purchases are final, and the Commission said the process for getting an exception to that policy is “unclear and confusing, involving emails and web pages that do not explain how to seek a refund for in- app charges, or that suggest that consumers cannot obtain a refund for such charges.”

The lawsuit shouldn’t come as much of a surprise to Amazon. The Seattle-based retailer said in a letter to the FTC last week that it thought its current practices are good enough to protect consumers and their families, and it would be willing to defend its actions in court.

“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,” Amazon Vice President and Associate General Counsel Andrew DeVore said in the letter. “And as we have made clear from the outset of your inquiry, our experience at launch was responsible, customer-focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service.”

This isn’t the first time the FTC has gone after an app store owner for its in-app purchase practices. Apple settled a lawsuit with the Commission earlier this year that requires the company to refund any and all unauthorized purchases made on iOS devices, and notify consumers that making an in-app purchase opens a 15-minute window when other purchases can be made without requiring a password.

Google may be the next company in line for a FTC investigation into its practices. In January, Apple General Counsel Bruce Sewell sent a letter to FTC chair Edith Ramirez and Commissioner Julie Brill, pointing them to a Consumer Reports article blasting Google for its in-app purchase policies, according to a report by Politico.

The FTC’s complaint is embedded below.

 

Comments

  • MT987
  • Regret

    So the FTC is responsible for bad parenting now?

  • Vroo (Bruce Leban)

    Sure, not having to enter your password repeatedly is a convenience. But if Amazon and Apple actually cared about consumers, they would make it possible to close the no password window. They refuse to do it for the same reason that they force you to turn on one-click for physical purchases in order to make any digital purchases (kindle fire apps, kindle ebooks, music, etc.). And the same reason that cable companies’ program guides have no feature to hide the channels you don’t subscribe to. It’s all about making it easier for them to sell you more stuff, not about your convenience.

    • Informed&Responsible

      Amazon launched parental controls from day 1. Parents can (and could from day 1) click a single radial button in settings, that would force a password entry for every transaction initiated on the device.

  • idonthavetimeforthis

    My god! Feds cracking down on business activity that could slightly affect the bottom line of that business! Oh the horror!

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