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FTC suing Amazon over children's in-app purchases

US govt body seeks full refunds for all affected customers

The US Federal Trade Commission has filed a court case against Amazon over "millions of dollars in unauthorized in-app charges incurred by children."

The government body believes that a lack of restrictions over what can be bought by the users of apps has lead to huge bills being racked up by children who don't understand, or care, that they're spending real money without their parent's permission. Announcing the case yesterday, the FTC said that it would be seeking full refunds for all customers affected.

"The FTC's lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent," the posting reads. "According to the complaint, Amazon keeps 30 percent of all in-app charges.

"Amazon offers many children's apps in its appstore for download to mobile devices such as the Kindle Fire. In its complaint, the FTC alleges that Amazon violated the FTC Act by billing parents and other Amazon account holders for charges incurred by their children without the permission of the parent or other account holder. Amazon's setup allowed children playing these kids' games to spend unlimited amounts of money to pay for virtual items within the apps such as 'coins,' 'stars,' and 'acorns' without parental involvement."

When in-app purchases were introduced by Amazon in November, 2011 there was no need to enter a password to authorise them. This was updated in March, 2012, but only introduced the necessity for a password in purchases of $20 and above. Further changes to the system, in 2013, still failed to appease the Commission.

"In early 2013, Amazon updated its in-app charge process to require password entry for some charges in a way that functioned differently in different contexts," the FTC statement continues. "According to the complaint, 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 during which the child could then make unlimited charges without further authorization. Not until June 2014, roughly two and a half years after the problem first surfaced and only shortly before the Commission voted to approve the lawsuit against Amazon, did Amazon change its in-app charge framework to obtain account holders' informed consent for in-app charges on its newer mobile devices, as explained in the complaint."

This is the second such case pursued by the FTC, which also forced Apple to repay at least $32.5 million to its customers in a very similar case earlier this year.

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Dan Pearson