United States - FTC Alleges Amazon Unlawfully Billed Parents for Millions of Dollars in Children’s Unauthorized In-App Charges

On July 10, the FTC filed a complaint in federal court charging Amazon with billing parents and other account holders for millions of dollars in unauthorized in-app charges unwittingly incurred by children.The FTC complaint seeks refunds for the unauthorized charges. According to the FTC, Amazon’s set up for kids’ games and other apps that appeal to children on the Kindle Fire, which did not require entry of a password before incurring charges, encouraged children to spend unlimited amounts of money to buy virtual goods, like coins, stars, and pet food, without the consent of their parents or other account holders. (Moreover, according to the complaint, 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.)  Parents complained that they were unaware, and their children did not understand, that they could spend real money for these extras, from 99 cents to $99 each.  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. The FTC’s lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company 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.  The Amazon lawsuit is the Commission’s second case relating to children’s in-app purchases; Apple, Inc. settled an FTC complaint concerning the issue earlier this year.