Federal Trade Commission had reached settlement agreement with Apple and Google in 2014 on issue of parental consent and passwords for in-app purchases
A federal judge has ruled that Amazon is liable for in-app purchases made by children, the latest development in a suit filed by the Federal Trade Commission in 2014.
The FTC reached a settlement agreement with Apple and Google in 2014 about in-app purchases made by children without parental consent but sued Amazon when the Seattle company did not agree to settle. All three companies now require a password for in-app purchases or an opt-in to enable purchases without a password.
The millions of dollars billed to Amazon customers without a mechanism for consent, the thousands of customers complaining about unauthorized charges, and the time spent seeking refunds for those charges, all demonstrate substantial injury, wrote US district judge John Coughenour in Washington state on Tuesday.
It is Amazons stated policy that in-app purchases are final and nonrefundable, likely discouraging much of its customer base from attempting to seek refunds.
The judge also noted that 1,573 customers who sought refunds did not receive them.
The judge asked for information from the FTC and Amazon about how much money Amazon owes consumers related to the in-app purchases, and did not immediately decide on a remedy. The FTC said it would press for full refunds for affected Amazon customers.
The agency has accused the online retailer of failing to make proper disclosures to parents regarding purchases made by their children while using apps such as Pet Shop Story.
The judge cited in his ruling what he said was a confidential document about Amazons marketing plan, in which it acknowledged that IAP isnt a concept widely known by customers.
Coughenour also quoted Aaron Rubenson, who says on his LinkedIn account that he is head of the Amazon app store, that customer complaints about the purchases were near house on fire. The judge also quoted Rubenson saying, Were clearly causing problems for a large percentage of our customers.
FTC data analyst Julie Miller estimated that Amazon had made $86m from the in-app purchases and refunded $10m. She estimated that fully 42% of the total purchases were unauthorized, the judge said. The judge said he believed that number could be inflated and asked for a further briefing.
Amazon called Millers estimate fundamentally flawed, the judge said. Amazon did not respond to requests for comment for this story.
The FTC settled similar cases with Apple and Google in 2014. Apple agreed to refund customers at least $32.5m in unauthorized charges, while Google agreed to pay at least $19m.
Read more: https://www.theguardian.com/technology/2016/apr/27/amazon-pay-consumers-in-app-purchases-children
