Feds: Amazon Let Kids Buy In-App Goods Without Consent

Kindle FireIn January, Apple agreed to refund consumers $32.5 million to settle an FTC complaint that it charged parents for their kids’ in-app purchases without adult consent.

Google (Play) may soon be hit with a similar complaint. But today, it was Amazon that felt the sting of an FTC lawsuit (full complaint below).

The FTC action says that “Amazon.com, Inc. has billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children.” It seeks to recover millions of dollars in refunds to consumers for these alleged unauthorized charges.

The FTC complaint says that children were permitted to incur charges, especially in games, without any parental involvement. This is based on the contention, going back to 2011, that Amazon required no passwords or other authorizations by parents before their kids could ring up charges.

Amazon modified the policy in 2012 “to require an account owner to enter a password only for individual in-app charges over $20.” But kids could continue to incur charges under the $20 threshold without parental approval.

Internal Amazon memos reportedly describe numerous consumer complaints and characterize the situation as a “house on fire.” However Amazon’s official policy toward in-app purchases was that they were “final and nonrefundable.”

In-app purchases is far-and-away the dominant app revenue model according to data from App Annie. Indeed nearly 90 Percent of Google Play app revenues are derived from so-called “freemium” games according to another App Annie report.

Currently Italian regulators are investigating whether freemium games (and in-app purchasing) mislead consumers. It’s unlikely that Amazon will be vindicated in court; it’s more likely the company will disgorge an Apple-like multimillion-dollar settlement.

Related Topics: Amazon | Channel: Industry | Legal: General | Top News

Sponsored


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



Marketing Day:

Get the top marketing stories daily!  

Share

Other ways to share:
 

Read before commenting! We welcome constructive comments and allow any that meet our common sense criteria. This means being respectful and polite to others. It means providing helpful information that contributes to a story or discussion. It means leaving links only that substantially add further to a discussion. Comments using foul language, being disrespectful to others or otherwise violating what we believe are common sense standards of discussion will be deleted. You can read more about our comments policy here.

Get Our News, Everywhere!

Daily Email:

Follow Marketing Land on Twitter @marketingland Like Marketing Land on Facebook Follow Marketing Land on Google+ Subscribe to Our Feed! Join our LinkedIn Group Check out our Tumblr! See us on Pinterest

 
 

Click to watch SMX conference video

Join us at one of our SMX or MarTech events:

United States

Europe

Australia & China

Learn more about: SMX | MarTech


Free Daily Marketing News!

Marketing Day is a once-per-day newsletter update - sign up below and get the news delivered to you!