The US Federal Trade Commission is suing Amazon for not having enough safeguards in place to prevent children from racking up millions of dollars worth of virtual currency and in-app purchases.
FTC chair Edith Ramirez said in a statement: “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.”
Amazon keeps 30 percent of all in-app charges, the FTC said in its complaint. The case “highlights a central tenant” of consumer protection laws in the U.S., that companies should get customer permission before charging them, said Jessica Rich, director of the FTC’s Consumer Protection Bureau, during a press conference about the lawsuit.
Amazon, in a letter to the FTC July 1, said it was “deeply disappointed” that the agency was moving toward filing a lawsuit. “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,” wrote Andrew DeVore, Amazon’s associate general counsel.
This is not the first time the FTC went after a company over in-app purchases by children. In January 2014 Apple provided full refunds to consumers, paying a minimum of $32.5 million, to settle a Federal Trade Commission complaint that the company billed consumers for millions of dollars of charges incurred by children in kids’ mobile apps without their parents’ consent.
Likely Amazon will have to make a token payment to make the FTC complaint go away. Given that Apple has the larger ecosystem and more user engagement, the likelihood of having to pay the same amount or more is not viable.