Amazon allowed kids to spend millions on in-app purchases, FTC says

The agency's lawsuit against Amazon mirrors its earlier action against Apple for a similar problem

Amazon.com has billed parents for millions of dollars' worth of unauthorized in-app purchases made by their children, the FTC said in a complaint filed Thursday in a U.S. court.

The FTC's lawsuit, filed in U.S. District Court for the Western District of Washington, seeks a court order requiring Amazon.com to refund parents for unauthorized purchases made by their children. The FTC also wants the court to ban the company from billing parents and other account holders for in-app charges without their consent, the agency said in a press release.

Amazon.com keeps 30 percent of all in-app charges, the FTC said in its complaint.

Amazon didn't immediately respond to a request for comment on the complaint.

The FTC's lawsuit against Amazon.com echoes a complaint brought by the agency against Apple. In January, Apple agreed to pay at least US$32.5 million to customers in a settlement with the FTC over children's in-app purchases.

This week, Politico reported that Apple has complained to the FTC that Google allows the same kinds of in-app purchases in its mobile app store.

In the Amazon case, the FTC noted that the company offers many children's apps for mobile devices such as the Kindle Fire. The company violated the FTC Act, prohibiting unfair and deceptive business practices, by billing parents and other Amazon account holders for charges incurred by children without adult consent.

Amazon's app store allowed children playing games to spend "unlimited amounts" of money to pay for virtual items without parental involvement, the FTC alleged.

When Amazon introduced in-app charges to the Amazon app store in November 2011, there were no password requirements of any kind, the FTC alleged. Many kids' games encouraged children to acquire virtual items in ways that blur the lines between spending virtual currency and real money, the agency said.

In one app, "Ice Age Village," children can use virtual coins and acorns to buy items in the game without a real-money charge. However, they can also purchase additional coins and acorns using real money on a screen that is visually similar to the one that has no real-money charge, the FTC said. A one-time purchase in the app could cost as much as $99.99.

As early as December 2011, Amazon employees raised concerns about in-app purchases, the FTC said in its complaint. One internal Amazon communication said that allowing unlimited in-app charges without any password was "clearly causing problems for a large percentage of our customers," the FTC said.

In March 2012, Amazon updated its in-app charge system to require an account owner to enter a password for individual in-app charges over $20. But Amazon continued to allow children to make an unlimited number of individual purchases of less than $20 without a parent's approval, the FTC said.

An Amazon employee noted at the time of the change that "it's much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product," according to the complaint.

Then in early 2013, Amazon updated its in-app charge process to require password entry for some charges, but the process worked in different ways in different contexts, the FTC alleged. Even when a parent was prompted for a password to authorize a single in-app charge made by a child, that single authorization often opened an undisclosed window of 15 minutes to an hour allowing the child to make unlimited charges, the agency said.

Amazon changed its in-app purchase policy again in June, "roughly two and a half years after the problem first surfaced," the FTC said in a press release.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentregulationlegalgamesamazon.comU.S. Federal Trade CommissionCivil lawsuitsMobile games

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Bitdefender 2019

Bitdefender’s best-in-class security solutions have been awarded Product of the Year. Get cybersecurity that 500 MILLION users already have and trust!

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?