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FTC Sues Amazon for App-Charges Incurred by Kids

By Gabriella Khorasanee, JD on July 18, 2014 | Last updated on March 21, 2019

The sight of toddlers and children with tablets and smart phones is pretty common these days -- even I'm guilty -- sometimes technology is the only thing that will curb a meltdown (if only that were true of adults). And, any parent probably has their own story about how their child managed to purchase apps (or movies on demand, in my case). How the kids manage to figure this out is a mystery.

Well, parents will have one less thing to worry about because the FTC is taking up one of their causes: unauthorized in-app charges, reports Inside Counsel.

Amazon's In-App Store

In November 2011, Amazon introduced its App Store, which did not require passwords for in-app charges for apps targeted toward children. For example, in one kid's game "Ice Age Village," children can make in-app purchases of "coins" or "acorns," with the largest in-app purchase for that game costing $99.99. To put this in context, one parent complained of $358.42 of unauthorized in-app charges. What made the situation worse was Amazon's policy that in-app charges were final and non-refundable, said the FTC in a statement.

The FTC Complaint

On July 10, 2014, the FTC filed a complaint in federal district court in Seattle against Amazon alleging violations of the FTC Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce." According to the FTC, the unauthorized in-app charges constitute "unfair practices" and caused consumer injury. The FTC is seeking injunctive relief preventing further violations of the FTC Act, and asks for costs and millions of dollars in refunds to customers.

Will Amazon Settle?

In his report on the dispute between Amazon and Hachett for The New York Times, Steve Lohr says, "settling isn't the Amazon way." So, the question is, will it fight the FTC on this issue? If we look into our crystal ball, we see a settlement in Amazon's future. For one thing, if they learn from history, Amazon will see that Apple settled a similar claim with the FTC back in January of this year. And, roughly one month before the FTC filed its complaint, Amazon finally "change[d] its in-app charge framework to obtain account holders' informed consent for in-app charges on its newer mobile devices." Amazon has not yet released an official statement.

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