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Thursday, July 10, 2014
Amazon Billed Parents for Millions of Dollars in Children's Unauthorized In-App Charges

The U.S. government sued over allowing children to rack up millions of dollars in charges related to mobile apps without getting permission from their parents.

The U.S. government sued over allowing children to rack up millions of dollars in charges related to mobile apps without getting permission from their parents.

A Federal Trade Commission complaint filed today in federal court seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning from billing parents and other account holders for in-app charges without their consent. According to the complaint, Amazon keeps 30 percent of all in-app charges.

Amazon offers many children's apps in its appstore for download to mobile devices such as the Kindle Fire. In its complaint, the FTC alleges that Amazon violated the FTC Act by billing parents and other Amazon account holders for charges incurred by their children without the permission of the parent or other account holder. Amazon's setup allowed children playing these kids' games to spend unlimited amounts of money to pay for virtual items within the apps such as "coins," "stars," and "acorns" without parental involvement.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," said FTC Chairwoman Edith Ramirez.

The complaint alleges that when Amazon introduced in-app charges to the Amazon Appstore in November 2011, there were no password requirements of any kind on in-app charges, including in kids' games and other apps that appeal to children. According to the complaint, this left parents to foot the bill for charges they didn't authorize.

In March 2012, according to the complaint, Amazon updated its in-app charge system to require an account owner to enter a password only for individual in-app charges over $20. As the complaint notes, Amazon continued to allow children to make an unlimited number of individual purchases of less than $20 without a parent's approval.

The complaint alleges that in early 2013, Amazon updated its in-app charge process to require password entry for some charges in a way that functioned differently in different contexts. According to the complaint, even when a parent was prompted for a password to authorize a single in-app charge made by a child, that single authorization often opened an undisclosed window of 15 minutes to an hour during which the child could then make unlimited charges without further authorization.

According to the complaint, thousands of parents complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges.

This is the FTC's second case relating to children's in-app purchases; Apple settled an FTC complaint concerning the issue earlier this year.

The FTC is seeking full refunds for all affected consumers, disgorgement of Amazon's ill-gotten gains, and a court order ensuring that in the future Amazon obtains permission before imposing charges for in-app purchases.

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