Amazon Will Compensate for In-App Purchases Made by ChildrenAdded: Monday, May 2nd, 2016
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According to a recent court decision in a suit filed by the FTC in 2014, Amazon must compensate for in-app purchases made by children. Two years ago, the Federal Trade Commission (FTC) reached a settlement agreement with Apple and Google about in-app purchases made by children without parental consent. Apple agreed to refund over $32.5m in unauthorized charges; Google agreed to pay over $19m. However, Amazon refused to settle at the time, and the FTC sued the Seattle company. Now all tech firms require a password for in-app purchases or an opt-in feature to enable purchases without confirmation.
The US district judge took into account that in-app purchases made by children resulted in millions of dollars billed to Amazon customers, thousands of customers complaining about unauthorized charges, and waste of time on seeking refunds for those charges. In his opinion, all this demonstrated substantial injury. In addition, Amazon’s stated policy says that in-app purchases are final and nonrefundable, which effectively discouraged most customers from their attempts to seek refunds. It was also revealed that more than 1,500 customers who sought refunds did not receive them.
The judge required both the FTC and Amazon to provide information about how much money Amazon owes consumers for in-app purchases, and postponed the decision on a remedy. In the meantime, the FTC promised to press for full refunds for Amazon customers who suffered from the unauthorized purchases.
The FTC has accused Amazon of failing to make proper disclosures to parents about purchases made by their children through various apps like Pet Shop Story. In his court decision, the judge cited some confidential document containing information about the marketing plan of the online retailer, where it was acknowledged that “IAP” is not a concept widely known by customers. Moreover, the judge also quoted the head of the Amazon app store, who admitted that customer complaints about the purchases were “near house on fire”, so the company was clearly causing problems for lots of its customers. The FTC estimated that Amazon had earned $86m from the in-app purchases, while refunded only $10m of them. It was also estimated that about 42% of the total purchases were unauthorized, but the judge believed that the number is “inflated” and asked for a further briefing.
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