Good news for Amazon customers whose kids racked up massive in-app purchase bills: refunds may soon be on the way.
Amazon and the Federal Trade Commission have agreed to end a legal dispute over in-app purchases through things like online games downloaded through the company’s app store. The agreement paves the way for up to $70 million in refunds for unauthorized purchases made between November 2011 and May 2016. The case is similar to previous FTC actions against Apple and Google that together paid out more than $50 million in refunds after settlements back in 2014.
“This case demonstrates what should be a bedrock principle for all companies — you must get customers’ consent before you charge them,” Thomas B. Pahl, acting director of the FTC’s Bureau of Consumer Protection said in a statement. “Consumers affected by Amazon’s practices can now be compensated for charges they didn’t expect or authorize.”
Amazon will operate the refund program, and FTC said more details will be announced soon.
FTC sued Amazon in 2014, arguing that changes in the online retail giant’s in-app purchasing systems were not properly disclosed and failed to get customers’ permission for some purchases. A Federal Judge last year ruled that Amazon was liable for unauthorized purchases stemming from these changes. At the same time, the judge also denied the FTC’s request for an injunction that would have forbidden Amazon from similar conduct in the future.
Both sides appealed the respective decisions, and the agreement means that Amazon and FTC will drop their appeals.
Amazon’s in-app purchasing system has evolved over the years, but before the FTC suit, there were times when no password was required at all for in-app purchases. Amazon added a $20 limit to the system, but small purchases still went through without a password.
Then, in 2013, the company started requiring passwords for all purchases, except those made within 15 minutes of last making a purchase, meaning your kid could make plenty of purchases as soon as you hand a device back to them after approving a single purchase.
That last move wasn’t properly disclosed to users, drawing the FTC suit. The FTC also noted that Amazon’s refund process wasn’t clear enough, with suggestions that refunds weren’t possible at times.
Amazon has altered the in-app purchase system since the FTC suit in a manner that prevents the accidental purchases, leading the court to decide last year that Amazon did not have to submit to further monitoring.
