Amazon found guilty for unfairly billing parents for kids’ in-app purchases; Multi-million refund may be issued
Apr 28, 2016 11:04 PM EDT
Many users of Amazon's Android appstore and Kindle Fire owners have been lured by "Free" apps, which later discovered those apps surreptitiously charged parents for their kids' in-app purchases transactions. A federal court ruled that Amazon failed to alert users of the risks of in-app purchases in "free" apps. The online retailer company is also expected to issue a big refund to some customers, like what Apple and Google did.
The Federal Trade Commission first lodged the case against Amazon in 2014 for unfairly billing parents for million dollars in unauthorized in-app purchases made by their children. The charge has been made after Apple and Google settled their cases over the same issue.
Venture Beat details that many parents have been lured by "Free" apps, which was later discovered that it is not really free because of in-app purchases. Parents attached their credit card accounts to make it easier to pay goods contain within apps. As a result, it is very much easy for kids to splurge away money from in-app purchases.
The Federal ruled that Amazon failed to inform parents the risks of in-app charges within apps that labelled as "free". Additionally, many apps prompted users to make in-app purchases, directed and likely to be used by kids. "For example, a child may be prompted to use or acquire seemingly-fictitious currency, including a 'boatload of doughnuts, a can of stars, and bars of gold,' but in reality the child is making an in-app purchase using real money," Judge John Coughenour of the U.S. District Court for the Western District of Washington wrote in his judgment against Amazon.
FTC also criticized the presentation of information in the app store, saying that in-app purchases were not clearly signposted. Moreover, Amazon's first in-app purchases in November 2011 did not require account holder approval, by entry of a password or any other means, prior to the completion of an in-app purchase.
US District Judge John Coughenour sided with FTC and said: The millions of dollars billed to Amazon customers without a mechanism for consent, the thousands of customers complaining about unauthorised charges and the time spent seeking refunds for those charges, all demonstrate substantial injury."
According to BBC, while Amazon will have to shell out money for some refunds, it is yet to be determined how much money it will cost the company. FTC chairwoman Edith Ramirez said they plan to make a case "for full refunds to consumers as a result of Amazon's actions."
But previously, FTC said that Apple and Google settlement resulted in more than $50 million in refunds to consumers. So it is expected that if FTC gets in the way, Amazon's refunds could potentially reach somewhere in the multi-millions.