FTC Sues Amazon Over Millions in Unauthorized Children's In-App Purchases

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The Federal Trade Commission has filed a lawsuit against Amazon, claiming the online retail giant billed parents millions of dollars for unauthorized charges made by children in a statement released Thursday. The suit comes as the latest in a string of actions the FTC has taken against tech giants, including a settlement with Apple and a complaint filed against T-Mobile

In a press conference call, FTC Consumer Protection Director Jessica Rich said the spree targeting tech companies aimed to make clear to retailers that they must ensure authorized purchases.

"We are very concerned about the issue of unauthorized charges," she said. "As you'll note from our complaint last week against T-Mobile and our case against apple, we believe this has been an issue on the mobile platform, and we want to make clear you can't place charges on a bill without getting informed consent... We encourage all companies to follow informed consent."

This "informed consent," Rich said, could include retailers preventing charges until the consumer provides a password, or including features that deter children from tapping on purchase buttons for the apps.

Rich also declined to comment on whether the FTC will pursue Google, as Android smartphone owners have also found unauthorized charges made by children for downloadable apps and games.

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Hudson B. Kingston, legal director for online privacy group Center for Digital Democracy, praised the FTC's move and echoed Rich's call. 

"Amazon's policies of making it simple for children to accidentally spend hundreds of dollars in a 'kids' app, and it's apparent refusals to refund the money to complaining parents, are irresponsible and unfair," Kingston said in a statement. "Today's FTC action shows that consumers who have been charged for their kids' unauthorized in-app purchases should not have to foot the bill... The FTC's complaint should serve as a wake-up call for better corporate ethics."

According to the FTC, when Amazon introduced in-app charges in November 2011, the company failed to implement password requirements that would normally deter children from purchasing items. Instead, kids purchased games and virtual in-game items, racking up the bill parents would later have to pay.

The FTC is seeking a court order requiring Amazon to refund customers, claiming that Amazon employees were aware of the issues as early as December 2011.

"Even Amazon's own employees recognized the serious problem its process created," FTC chairwoman Edith Ramirez said in a statement. "We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

Amazon updated its in-app charge process in June this year to obtain consent from account holders for purchases on mobile devices. The retailer has not yet commented on the lawsuit, but did release a letter to the FTC earlier this month on in-app purchasing.

This article is from the archive of our partner The Wire.