FTC Sues Amazon.com For Unauthorized Purchases
HandelontheLaw.com Staff Writer
Buying digital trinkets and tokens online with real money can be child’s play; just ask the Federal Trade Commission. In early July 2014, the FTC sued Amazon.com for charging customers millions of dollars for purchases made by others – often children - without the adult customers’ knowledge or consent. Known as “in-app” purchases for 99 cents to $99.99 each, these charges were often made by children in a mobile application store while playing games or using apps on Kindle Fires and other devices using the Android operating system. Purchases were reportedly as easy as closing a pop-up window, allowing charges by even children too young to read. The suit seeks an injunction against Amazon.com and full restitution to its affected customers.
The FTC alleges that: Amazon.com first allowed in-app purchases in November 2011; Amazon.com derives 30% of its revenue from in-app purchases; users of games or apps would first click “get item” or something similar for an in-app purchase, the response was cached so the user would not need to enter information for every purchase and children thereafter began racking up charges on their parents’ accounts without realizing they were spending real money; customer complaints began within weeks; Amazon.com knew of the issue; in March 2012 Amazon.com began using password entry for charges over $20 but kept allowing lower purchases without the password; in 2013, Amazon.com strengthened the password requirements and shortened the effective periods of cached information; Amazon.com did not give sufficient information about the in-app purchases and did not explain the amount of real money involved. An example given is that the in-app purchase of “5 acorns and a slice of cake” seems minor until you realize that acorns cost $10 each and the slice of cake costs $25; in June 2014, Amazon.com finally began requiring “informed consent” for in-app purchases on newer devices.
Before filing the complaint in the U.S. District Court for the Western District of Washington, the FTC made a settlement offer that Amazon.com rejected. The settlement offer was similar to one accepted by Apple, Inc. in January 2014 whereby Apple agreed to refund $32.5 million or more to customers charged for unauthorized purchases, disclose all “material information” for future in-app charges and receive informed consent for those charges.
Amazon.com responded that: it is “deeply disappointed” in the complaint; the company has continuously improved its experience since launch but even at launch the company refunded purchases after customers advised the company of unauthorized purchases by their children; the company’s in-app purchase processes already meet or exceed the Apple consent order requirements.
Regardless of the suit’s outcome, informed consent should be required for every type of purchase from every type of vendor.
DO’S AND DON’TS
DO contact Amazon.com about any charges you do not recognize and/or have not authorized.
DON’T give up if Amazon.com does not resolve your problem.
DO obtain the FTC’s assistance by calling 1-877-FTC-HELP (1-877-382-4357) or using the online Complaint Assistant here: https://www.ftccomplaintassistant.gov/#crnt&panel1-1
By Kathy Catanzarite
Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.
CONSUMER FRAUD DOS AND DON'TS