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Amazon to Refund Nearly $70 Million to Parents for Kids' App Purchases, US FTC Rules

Amazon to Refund Nearly $70 Million to Parents for Kids' App Purchases, US FTC Rules

By Samantha Schmidt, The Washington Post | Updated: 1 June 2017 11:39 IST

Highlights

FTC announced that parents will get money refunds for Amazon payments
The refund money could amount to more than $70 million for Amazon
The refunds bring closure to a nearly three-year legal battle

Parents whose children made Amazon purchases on mobile apps without their permission will begin getting their money back, the Federal Trade Commission announced Tuesday. And it turns out that money could amount to more than $70 million (roughly Rs. 452 crores) - charges incurred between November 2011 and May 2015.

The refunds bring closure to a nearly three-year legal battle surrounding complaints that the tech giant made it too easy for children to make the purchases.

Federal regulators filed a lawsuit in July 2014 saying Amazon charged parents millions of dollars of unauthorized payments for what's known as "in-app purchases," virtual items offered within mobile games such as Candy Crush Saga, The Washington Post reported. (Amazon's founder, Jeffrey P. Bezos, owns The Washington Post.)

In an April 2016 ruling, a federal judge granted the FTC a summary judgment that found Amazon responsible for the charges. While entering a password linking an 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," US District Judge John Coughenour wrote in his order.

Last month, the FTC and Amazon agreed to end their litigation, clearing the way for the refunds to begin. All consumers eligible for the refunds should have received an email from Amazon.

It was the latest in lengthy FTC investigations into similar in-app purchases on devices running software by Apple, Amazon and Google. In 2014, Apple agreed to a $32.5 million settlement and Google settled charges and agreed to repay $19 million to consumers whose children made such unauthorized mobile purchases through the Android app store.

The company began receiving complaints about the unauthorized charges after the launch of the Amazon app store in 2011. Amazon has since then changed the in-app purchase interface and added more parental controls, while also giving refunds to some consumers who complained.

In the FTC's original complaint, the agency wrote that Amazon's setup "allowed children to spend unlimited amounts of money to pay for virtual items within the apps such as 'coins,' 'stars,' and 'acorns' without parental involvement," Initially, no passwords of any kind were required for children to buy extra items while playing games, leaving parents to foot the bill for the charges.

One mother mentioned in the complaint told Amazon that her daughter was able to rack up $358.42 in unauthorized charges. Others complained that even children who could not read were able to "click a lot of buttons at random" and make several purchases without their parents permission.

After the agency sued, Amazon sent a letter to FTC Chairwoman Edith Ramirez saying the decision was "deeply disappointing" and that the tech company had improved its parental controls since the Amazon app store's launch in 2011, The Post reported.

Amazon keeps 30 percent of all in-app charges, and unlike sales of physical goods on Amazon, in-app purchases are nonrefundable.

Thomas B. Pahl, acting director of the FTC's Bureau of Consumer Protection, said in a news release, "This case demonstrates what should be a bedrock principle for all companies - you must get customers' consent before you charge them."

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