Court Rules that Amazon Is Liable for Minors' In-App Purchases
Amazon is liable for the in-app charges incurred by minors using its devices, according to a federal judge. The company was sued by the Federal Trade Commission (FTC) on behalf of consumers who said they were surprised by charges made to their accounts for apps they believed were free.
The decision means that the e-commerce giant will have to issue refunds to customers for unauthorized purchases, although the exact amount the company owes has yet to be decided.
“We are pleased the federal judge found Amazon liable for unfairly billing consumers for unauthorized in-app purchases by children,” said FTC Chairwoman Edith Ramirez in a statement today. “We look forward to making a case for full refunds to consumers as a result of Amazon’s actions.”
'Boatload of Doughnuts'
The case involves the app store run by Amazon for users with Kindle Fire or Android devices. As with similar app stores run by other companies, Amazon sold a number of apps that were listed as free, but that also included the possibility of in-app purchases, including some that cost as much as $99.
The FTC first filed the complaint against Amazon in July 2014, accusing the company of engaging in unlawful and deceptive practices. The court ruled that the company’s disclosures about the possibility of in-app charges within otherwise “free” apps were not sufficient to inform consumers about the charges.
In particular, the FTC argued that many apps that prompted users to make in-app purchases were directed toward and likely to be used by children. “For example, a child may be prompted to use or acquire seemingly-fictitious currency, including a ‘boatload of doughnuts, a can of stars, and bars of gold,’ but in reality the child is making an in-app purchase using real money,” Judge John Coughenour of the U.S. District Court for the Western District of Washington wrote in his judgment against the company.
Damages To Be Decided
Furthermore, the judge noted that when the company initially implemented in-app purchases in November 2011, the default setting for users’ accounts did not require the approval of the account holders -- via passwords or any other means -- before the in-app purchases were completed. That allowed children to inadvertently run up massive charges on their parents' accounts.
The FTC and Amazon must now make their cases before the judge to determine exactly how much the company owes to consumers. The FTC has already reached agreements in similar cases with Apple and Google, under which the companies were required to fully refund parents the costs incurred by their children. It’s not clear how much money Amazon could potentially have to shell out, but the FTC said the Apple and Google agreements resulted in more than $50 million in refunds to consumers.
Image Credit: Photo of Fire Kids Edition (pictured above) from Amazon.