The Federal Trade Commission will seek millions in recompense from Amazon on behalf of consumers whose kids made in-app purchase without parental consent, according to a lawsuit filed by the commission in the U.S. District Court for the Western District of Washington.
The FTC's lawsuit also stated the commission's intent to ban Amazon from charging account holders for non-consensual purchases, alleging that the colossal online retailer retains 30 percent of purchases made inside of apps.
Though Apple submitted to the will of the FTC in January 2014, to the tune of a $32.5 million settlement, Amazon has maintained that it has addressed every consumer complaint of unauthorized in-app purchases with refunds and argued that it shouldn't be judged by the precedence the commission established with Apple.
The FTC stated that Amazon started charging consumers for in-app purchases in November of 2011 and failed to regulate unauthorized purchases with sound policies, even though the media had already begun reporting on consumer complaints surrounding child-purchases of in-app items and virtual currency.
"Amazon nonetheless often has failed to obtain parents' or other account holders' informed consent to in-app charges incurred by children," stated the complaint. Just weeks after Amazon began billing for in-app charges, consumer complaints about unauthorized charges by children on Amazon's mobile devices reached levels an Amazon Appstore manager described as 'near house on fire.'"
Children using apps often failed to understand that the in-app items they picked up, such as virtual coins or digital animals, came with real-world charges, the FTC stated. Though Amazon has since put a password requirement on in-app purchases, the FTC said the online retailer's use of a pop-up warnings did little to stop kids from making purchases -- it said children would simply swipe or tap the pop-up payment notifications, clearing the messages away and confirming the associated charges.
Despite Amazon's password requirements for in-app purchases, the FTC accused the retailer of allowing user passwords to be stored on their devices. With passwords cached for anywhere from 15 minutes to an hour, the FTC said children could still rack up unsightly charges inside of apps.
Though Amazon and other companies with app stores have come under fire from consumers and regulators, Senator Deb Fischer, Nebraska (R), defended app retailers and chalked up the issues with in-app purchases to growing pains.
"Few, if any, doubt that the app marketplace established in recent years by Amazon and its competitors has fundamentally expanded and improved the American economy," stated Fischer. "To pursue enforcement against these companies for specific policies in place at the market's nascent stage would constitute a de facto tax on innovation that threatens future growth and opportunity."
