FTC sues Amazon over in-app purchases

The Federal Trade Commission filed a lawsuit against Amazon (NASDAQ:AMZN) for billing parents for millions of dollars in unauthorized in-app purchases made by children on Kindle Fire tablets and other mobile devices.

The charges, filed on July 10 in the U.S. District Court, stated that Amazon willingly allowed kids to make purchases within apps without parental consent, reported USA Today. The unauthorized charges, ranging from 99 cents to $99, were primarily for items that appeared in games.

"We are seeking this money back for consumers as well as an order preventing the company from billing consumers without their permission in the future," said Jessica Rich, director of the FTC's consumer protection bureau.

Amazon began in-app purchases in November 2011. However, the retailer did not implement password requirements to prevent kids from accidentally making purchases. So in March 2012 Amazon made passwords a requirement for purchases over $20 and then last year, for all purchases. However, entering a password would open a window for anywhere from 15 minutes to an hour, so children could still make purchases within that time frame, Rich said.

Apple recently faced similar unauthorized billing charges from the FTC over in-app purchases. The result was stricter policies for obtaining consent and a $32.5 million settlement.

In a letter to FTC Chairwoman Edith Ramirez, Amazon said it prefers to defend its policy for disclosures in court and that it shouldn't be held by the same requirements as Apple, reported the Washington Post

As more retailers start to include in-app purchasing opportunities on mobile, the question of authorization and rules around it will also become more prevalent.

For more:
-See this USA Today article
-See this Washington Post article

Related stories:
Amazon launches wearable technology store
Amazon launches Prime Pantry
New Amazon Fire takes aim at Apple
Amazon's Vine.com relaunches as online grocer with a twist
Amazon could soon launch local services

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.