Amazon is refusing to comply with orders from the Federal Trade Commission (FTC) to change its in-app purchase policies and has announced in a letter to the agency that it has "no choice" but to defend itself in court.
The Internet retailer faces the possibility of a lawsuit filed by the FTC after it said it will not change its in-app purchase process for Amazon mobile devices, such as the Kindle Fire tablet and the upcoming Amazon Fire Phone. The FTC says Amazon's one-click buy feature makes it too easy for children of parents owning Amazon devices to make unauthorized purchases while using the apps. In-app purchases are crucial in maintaining the business of an app store. Examples of these digital goods include extra lives and special tools that will allow players to advance to the next level in a gaming app.
The FTC says Amazon is liable for the thousands of complaints it has received from customers involving millions of dollars in unauthorized purchases by their children because the e-commerce company does not obtain "informed consent" from device owners before processing in-app purchases. In the most extreme cases, a few individual complaints involved hundreds of dollars in unauthorized in-app transactions.
But Amazon is unwilling to revise its in-app purchase policies, saying it has already installed full safety features to prevent children of device owners from buying digital goods without their parents knowing. The most notable of these features is the child-proof FreeTime mode, which parents can turn on to block all purchases and choose which apps their children are allowed to use. Amazon says it also provides instant notices to Amazon account holders whenever their credit cards are charged and has always provided refunds to parents of children buying things without their parents' consent.
"We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn't want we refunded those purchases," writes (pdf) Amazon associate general counsel Andrew DeVore in a letter sent to the FTC. "And as we have made it clear from the outset of your inquiry, our experience at launch was responsible, customer focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service."
The FTC, however, is adamant, saying Amazon only required informed consent from parents last month. The agency says it wants Amazon to provide password protection for every purchase and offer a more "streamlined" refund process. It could also impose heavy fines on Amazon and require the company to provide full disclosure of how it changes its policies.
Apple faced a similar situation last year, when it agreed with the FTC's terms to pay $32.5 million to customers who were charged for unauthorized purchases made by their children. However, Amazon asserts it is different from Apple because the iPhone maker does not have a children-specific mode for its iOS devices like Amazon does.
