Federal Trade Commission sues Amazon for children’s unauthorised in-app payments

The US Federal Trade Commission (FTC) has filed a lawsuit to force Amazon to refund consumers for unauthorized charges they received after children made in-app payments worth millions of dollars.

Amazon boss Jeff Bezos

The consumer body is also seeking to permanently ban Amazon from billing parents and other account holders for in-app charges without their consent. According to the complaint, the e-commerce giant keeps 30 per cent of all in-app charges.

The FTC said that no password or other indication of parental consent was required for charges in children’s apps after Amazon introduced in-app charges to the Amazon Appstore in November 2011.

In its complaint filed to a Washington district court, the FTC alleged that kids’ games often encourage children to acquire virtual items in ways that “blur the lines” between what costs virtual currency and what costs real money.

The body also highlighted internal communications among Amazon employees as early as December 2011 that said allowing unlimited in-app charges without any password was “…clearly causing problems for a large percentage of our customers,” adding that the situation was a “near house on fire”.

“For years, despite the very real consumer issue, Amazon often allowed children to run up unlimited charges without their parents’ knowledge or permission,” Jessica Rich, director of the Bureau of Consumer Protection, was quoted as saying on a conference call on Forbes' website.

Thousands of parents apparently complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges. One mother noted in the FTC complaint told Amazon that her daughter was able to rack up $358.42 in unauthorized charges, while others complained that even children who could not read were able to “click a lot of buttons at random” and incur several unauthorized charges.

The online retailer recently hit the headlines after it stalled the release of several Hachette book titles, including the new JK Rowling novel, and the new Lego film part of an ongoing price row.

In another blow, children's author Allan Ahlberg last week snubbed a lifetime achievement award after learning it was sponsored by Amazon. Ahlberg, who had been due to present the award - and collect a £5k cheque - at the inaugural Booktrust Best Book Awards on 2 July said the decision was due to internet giants stance on tax avoidance.

Join us, it's free.

Become a member to get access to:

  • Exclusive Content
  • Daily and specialised newsletters
  • Research and analysis

Join us, it’s free.

Want to read this article and others just like it? All you need to do is become a member of The Drum. Basic membership is quick, free and you will be able to receive daily news updates.