FTC files lawsuit against Amazon claiming it billed parents millions in unauthorized in-app purchases

The Federal Trade Commission (FTC) has filed a lawsuit against online retailer Amazon claiming the company charged parents millions of dollars in unauthorized in-app purchases.

The FTC is seeking court ordered refunds from Amazon for unauthorized charges made by children using devices like the Amazon Kindle Fire. According to the suit (available in PDF format), children could easily purchase items up to $99.99 from within apps.

The commission acknowledges that since the launch of in-app purchases on Amazon devices in 2011, Amazon has taken steps to reduce the risk of children spending hundreds of dollars on in-game features and virtual money (including limiting purchases to $20 and requiring a password for the initial purchase). However, it wasn’t until June 2014 that Amazon implemented the necessary changes to its in-app purchase protocol that required informed consent from the account holder for any in-app purchases.

This suit isn’t unexpected. On July 2, word surfaced that a proposed complaint was being drafted by the FTC. In response, Amazon sent FTC Chairwoman, Edith Ramirez a letter. In it, Amazon stated:

We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn’t want we refunded those purchases. And as we have made clear from the outset of your inquiry, our experience at launch was responsible, customer focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service.

Amazon also stated in the letter, “Pursuing litigation against a company whose practices were lawful from the outset and that already meet or exceed the requirements of the Apple consent order makes no sense, and is an unfortunate misallocation of the Commission’s resources.”

Apple has already settled with the FTC over similar issues with children and in-app purchases. The company was ordered to provide refunds to parents with children that purchased unauthorized in-app items. The minimum amount that Apple must refund overall is $32.5 million.