The Federal Trade Commission is angry with Amazon.com. The agency's anger is based on the complaints of parents who claim Amazon billed them for millions of dollars in unauthorized in-app purchases rung up by children.
The FTC channeled these parents' anger into a complaint filed in federal court that, if successful, would require refunds to consumers for the unauthorized (by the account holders) charges and set in place a permanent ban against Amazon from billing parents and other account holders without their consent.
Amazon is a vendor of third-party apps, a distributor for countless software developers. The FTC submitted the claim that Amazon keeps 30 percent of in-app charges for its troubles.
Amazon's protocol for in-app purchases allows children playing certain game apps to spend unlimited amounts of money to pay for virtual items within the apps, such as "coins," "stars," and "acorns" -- all without parents being the wiser.
Part of the FTC's complaint claims Amazon is in violation of the FTC act which clearly stipulates companies cannot allow minors unfettered and unauthorized charging privileges on their parents' or caretakers' accounts.
"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission. Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases," says FTC Chairwoman Edith Ramirez.
The FTC goes as far as to claim that not only did Amazon know about the problem, but that it refused to take corrective action, according to FTC consumer protection Director Jessica Rich.
"As internal e-mails uncovered in our investigation reveal, immediately after Amazon introduced in-app charges its own employees advised that Amazon was 'clearly causing problems for a large percentage of our customers,' even referring to the problems as a 'near house on fire'," said Rich.
The complaint states that thousands of parents were affected financially due to Amazon's negligence. There were examples noted such as one mother who claimed that her daughter was able to spend $358.42 in unauthorized charges, and some complaints were listed that even children who could not read were able to make purchases accidently, just by randomly clicking buttons on the site.
Apple faced a dust-up with the FTC earlier this year for similar reasons. That case was resolved to the FTC's satisfaction.
Amazon's response to the FTC action was expressed in a letter to Ramirez, in which the company claims it has taken corrective measures to conform to the same standards that Apple is now following after its FTC issues were resolved.
