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Amazon, not Google, next to face FTC's wrath over in-app purchases by children

post #1 of 33
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The U.S. Federal Trade Commission on Thursday announced that it has filed suit against retail colossus Amazon, alleging that the company allowed children to rack up millions of dollars in unauthorized in-app purchases through the Amazon Appstore -- charges similar to those brought against Apple last year.




Federal regulators are asking the United States District Court for the Western District of Washington to issue an order directing Amazon to refund parents for unauthorized purchases and ban the company from allowing purchases without the parents' consent in the future. Amazon's conduct was particularly egregious, the commission believes, because internal emails show that Amazon employees knew of the problem but took only token steps to resolve it.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," FTC Chairwoman Edith Ramirez said in a release. "Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

At least one employee of Seattle, Wash.-based Amazon sent an email to colleagues in December 2011 saying that unauthorized in-app purchases were "clearly causing problems for a large percentage of our customers" before describing the situation as "near house on fire," according to the FTC complaint.

The company later altered the behavior of in-app purchases, requiring authorization for any transaction over $20. That seems to have done little to help matters, as another employee again used the "house on fire" metaphor when referring to customers' complaints in July 2012.

Amazon then changed its policies to match those agreed to by Apple in the iPhone maker's $32.5 million settlement with the commission, but the FTC says Amazon continues to refuse refunds and instead puts parents through a "refund process that is unclear and confusing." The commission approached Amazon with a settlement offer prior to filing suit, but Amazon instead chose litigation.

Along with refunds, the commission is also asking for "disgorgement of Amazon's ill-gotten gains."
post #2 of 33
Amazon was already offered a settlement and relatively small fine to settle the compliant. Bezos turned it down, thus todays' action.

http://cdn0.vox-cdn.com/assets/4701794/AmazonFTC.pdf

http://www.theverge.com/2014/7/2/5864737/amazon-refuses-to-settle-with-ftc-in-app-purchases
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post #3 of 33
It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.
post #4 of 33
Quote:
Originally Posted by Wovel View Post

It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.

I agree this law suit is an excuses for parents who for years used the TV as a replacement for interacting with their children. Now they use the iPad/iPhone as a replacement for them self. Those charges if you ask me are a just reward for neglectful parenting.
post #5 of 33
Quote:
Originally Posted by Wovel View Post

It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.

Some questionable supervision does not a bad parent make. I've taught my son to ask me first for any download he wants to get. He asks me even when it's free.
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post #6 of 33
Quote:
Originally Posted by dasanman69 View Post

Quote:
Originally Posted by Wovel View Post

It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.

Some questionable supervision does not a bad parent make. I've taught my son to ask me first for any download he wants to get. He asks me even when it's free.

I think when we are talking about hundreds or thousands of dollars in charges that results in you contacting the FTC we have gone well beyond questionable supervision. These parents are not paying any attention to their children at all and handing them devices as baby sitters.
post #7 of 33
If Amazon ends up paying a fine of $32.5 million that would be devastating to their profits that quarter. Maybe even that half.
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post #8 of 33
If kids don't know the difference between spending real money and tapping buttons on a tablet, and parents fail to realize that their Play-store-authenticated device is a blank check I think it's hardly the kids that deserve the drunken sailor comparison.

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post #9 of 33
Quote:
Originally Posted by Wovel View Post

It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.

 

I might agree with you if this was about parents locking down their phones/tablets.  It's not.  This is about the failure of any of these platforms to provide an out-of-the-box working model for parental controls.  "We've fixed it since" doesn't forgive the sins of the past:

 

http://www.theverge.com/2014/7/10/5887765/ftc-sues-amazon-for-letting-children-rack-up-in-app-purchase-bills

Quote:
In many cases, the people making these purchases would have been children, and the FTC argues that Amazon was very aware that people were running up bills without realizing it. "Amazon has received thousands of complaints related to unauthorized in-app charges by children in these and other games, amounting to millions of dollars of charges," says the complaint. "By December 2011, the month after Amazon introduced in-app charges, an Appstore manager commented that 'we're clearly causing problems for a large percentage of our customers,' describing the situation as 'near house on fire.'" Parents who requested refunds "faced significant hurdles," making it difficult to know whether there were exceptions to the general rule that all sales were final.

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   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

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post #10 of 33
There goes Amazon's "profits" for the past three years!

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post #11 of 33
This just makes me SMDH...

I know several parents who practice the "the babysitter is the tablet" principle, and I usually give them loads of crap for it, because an electronic device should NEVER be in that role for a child, EVER!

However...

I must also SMH at the apologists in here trying to place the blame solely on the parents for this. According to the article, it was discovered that Amazon staff KNEW this was a serious issue, yet deliberately took no decisive action to mitigate this. Apple was guilty of this as well. But when Apple was made aware of the issue, at least they took steps to perfect the system and make it much for difficult for these situations to occur, regardless of what steps were needed to make them get to that point. The funny thing is, Apple got sued a SECOND time, AFTER they had already complied with previous orders and finished enhancing the system.

Whereas Amazon, after being told about it, and offered a settlement, thumbed their noses not only at the regulatory agency, but at their own employees who were raising the alarms! This is completely inexcusable behaviour, and I hope they get the book thrown at them hard!

We, as parents, need to be MUCH more diligent about what we give our kids, and allow them to do. But at the same time, we also must hold the companies that makes these product and services accountable for their actions, or in this case, blatant inaction.
post #12 of 33
Quote:
Originally Posted by Apple v. Samsung View Post

I agree this law suit is an excuses for parents who for years used the TV as a replacement for interacting with their children. Now they use the iPad/iPhone as a replacement for them self. Those charges if you ask me are a just reward for neglectful parenting.
Sorry, but that is just an apologist statement. While poor decisions in parenting do contribute to this situation, Amazon itself is also a huge contributor in that they wilfully neglected to heed the warnings of their own employees who saw the writing on the wall.
post #13 of 33

More money for the government to help close its budget gaps, Looks like they now using the DOJ office as a tax collector. yep they did not raise taxes they are just fining the money out of the companies bank accounts.

 

Well this teaching parents to be accountable as a parent and be responsible for what their kids are doing. Some when my kid throws a rock through someone window can I get the government to sue the window manufacturers for failing to make a window that did not break when my kids throw rocks at it.

post #14 of 33
Quote:
Originally Posted by Maestro64 View Post

More money for the government to help close its budget gaps, Looks like they now using the DOJ office as a tax collector. yep they did not raise taxes they are just fining the money out of the companies bank accounts.

Well this teaching parents to be accountable as a parent and be responsible for what their kids are doing. Some when my kid throws a rock through someone window can I get the government to sue the window manufacturers for failing to make a window that did not break when my kids throw rocks at it.

The $32 millions Apple paid were refunds. It didn't go to the government. It seems Amazon don't want to refund that much money.
post #15 of 33
Quote:
Originally Posted by NasserAE View Post

The $32 millions Apple paid were refunds. It didn't go to the government...

Do you have proof supporting that theory?

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post #16 of 33
Quote:
Originally Posted by SpamSandwich View Post

Do you have proof supporting that theory?
http://www.ftc.gov/news-events/press-releases/2014/01/apple-inc-will-provide-full-consumer-refunds-least-325-million.

It didn't go to government coffers.
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post #17 of 33
How... How is this possible?
I thought Amazon and the US Government had..."an understanding." 1eek.gif

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post #18 of 33

I wonder if Google will get nabbed by the FTC but they'd actually have to sell things through their store to do anything wrong. Last I read, the Google Play store didn't do much business so there might not be anything the FTC can do about them.

post #19 of 33
Quote:
Originally Posted by rob53 View Post

I wonder if Google will get nabbed by the FTC but they'd actually have to sell things through their store to do anything wrong. Last I read, the Google Play store didn't do much business so . . . .

Have you read anything about it in the last year?
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post #20 of 33
Quote:
Originally Posted by SpamSandwich View Post

Do you have proof supporting that theory?

Not a theory.. It's a fact. Check the link provided by Gatorguy.

Thanks for saving me the time 😃
post #21 of 33
Apparently, Amazon, Google, etc, have been using hi-tech decoy to rake in lots of "dirty" or unconscionable money in the last ten odd years! It's time they paid the price!
post #22 of 33
Quote:
Originally Posted by iSammi View Post

Apparently, Amazon, Google, etc, have been using hi-tech decoy to rake in lots of "dirty" or unconscionable money in the last ten odd years! It's time they paid the price!
have they? Sources?
post #23 of 33
Quote:
Originally Posted by Wovel View Post

It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.

With Apple at least it was more a case of uneducated parents. They had restrictions built in with iOS from when the first iPad released. But not everyone bothered to learn all the bits about the software and missed that part. Which is why from day one they were willing to do a one time exception to the 'all sales are final' and refund purchases, with a required lesson that the parental contrails are there. If parents didn't use them no second time. Or in cases where it was obvious the kid has the password, they would only refund the first incident. Like the guys the UK who didn't pay attention to his credit card bill for six months while Junior racked up dozens of downloads in and of apps. He didn't get a refund (this was also after Apple had stepped up the info on restrictions etc )

Amazon on the other hand released a tablet that required you to be signed in at all times and had zero restrictions.

And a bigger take away is that someone is willing to slap Amazon over anything. Maybe after this, the FTC can loaned the DOJ a pair since they don't seem to have their own

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post #24 of 33
Quote:
Originally Posted by IHateScreenNames View Post

If Amazon ends up paying a fine of $32.5 million that would be devastating to their profits that quarter. Maybe even that half.

The FTC required Apple to refund all purchases that fit the bill and hadn't already been refunded. So it would likely be that fine plus full refunds. So yeah it might sting a bit

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post #25 of 33
Quote:
Originally Posted by NasserAE View Post

Not a theory.. It's a fact. Check the link provided by Gatorguy.
Thanks for saving me the time 😃

Instead of thoughtlessly ganging up, you should've actually read the legal decision.

And I quote:
Quote:
"IT IS FURTHER ORDERED that Apple shall provide full refunds to Account Holders who have been billed by Apple for unauthorized In-App Charges incurred by minors as follows:


A. Apple shall provide prompt refunds to Account Holders for the full purchase price of any Eligible In-App Charge(s). For purposes of this Section II, an “Eligible In-App Charge” is an In-App Charge that the Account Holder indicates was incurred by a minor and was accidental or not authorized by the Account Holder. For purposes of this Section II.A, a “prompt” refund means a refund provided within the later of fourteen (14) days of a request for refund of an Eligible In-App Charge by the Account Holder or the completion of a fraud investigation. Apple may decline a refund request for an Eligible In-App Charge only if it has sufficient credible evidence that the refund request is fraudulent. Apple may process all refund requests through its customer service channels, which include a contact phone number and web form through which consumers may contact Apple directly.

B. Apple shall refund no less than $32,500,000.00 for Eligible In-App Charges pursuant to section II.A of this order, and such amount shall not constitute a penalty. Solely for the purposes of this section II.B of this order, Apple may approximate that 50% of all refunds provided to Account Holders for In-App Charges relate to Eligible In-App Charges.

C. Within thirty (30) days of the end of the Consumer Redress Period, Apple shall provide the Commission with records sufficient to show the refunds requested and paid to Account Holders for In-App Charges during the Consumer Redress Period, and any requests that were denied under Section II.A of this order.

D. If Apple fails to refund $32,500,000.00 pursuant to section II.B of this order, the balance of that amount shall be remitted to the Commission within forty-five (45) days of the end of the Consumer Redress Period.

E. All funds paid to the Commission pursuant to section II.D of this order may be deposited into a fund administered by the Commission or its designee to be used for equitable relief, at the Commission’s sole discretion, for informational remedies regarding In-App Charges by children or consumer redress and any attendant expenses for the administration of any redress fund. Any money not used for such purposes shall be deposited to the United States Treasury. Apple shall have no right to challenge the Commission’s choice of remedies under this Paragraph."

http://www.ftc.gov/sites/default/files/documents/cases/140115appleagree.pdf

Me again. That's a lot of weasel wording and sufficient evidence that NOT all of the money earmarked for consumers who were negligent in handing over their bank accounts to toddlers will receive 'every penny'... and I do not hesitate to mention I don't think anyone who foolishly let this happen deserves a refund anyway.
Edited by SpamSandwich - 7/11/14 at 1:10pm

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post #26 of 33

Well no actually, it's evidence that there is a possibility that some of that money ended up at the US Treasury, not that any of it did.

 

There is the possibility that Apple refunded at least $32,500,000 within 45 days and provided records to the Commission as such.

There is the possibility that Apple did not refund the full amount, so gave the outstanding balance to the Commission which distributed it in further refunds.

There is the possibility that some of that money handed over was deemed unnecessary for such purposes, so was given to the Treasury.

 

Without further information there is no evidence that any money ended up at the Treasury, just that it is a possibility.  I don't think it's particularly weaselly either, pretty straightforward.


Edited by Crowley - 7/11/14 at 7:43am

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post #27 of 33
Quote:
Originally Posted by Crowley View Post

Well no actually, it's evidence that there is a possibility that some of that money ended up at the US Treasury, not that any of it did.

There is the possibility that Apple refunded $32,500,000 within 30 days and provided records to the Commission as such.
There is the possibility that Apple did not refund the full amount, so gave the outstanding balance to the Commission which distrbuited it in further refunds.
There is the possibility that some of that money handed over was deemed unnecessary for such purposes, so was given to the Treasury.

Without further information there is no evidence that any money ended up at the Treasury, just that it is a possibility.

I'd guess that once Apple sent out the notices to app buyers that refunds would be available that a lot more than $32M was claimed by them.
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post #28 of 33

I'm inclined to agree, though I have no numbers to quote.

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post #29 of 33
Quote:
Originally Posted by NasserAE View Post


The $32 millions Apple paid were refunds. It didn't go to the government. It seems Amazon don't want to refund that much money.

yeah I know that but the Fines Apple and now Amazon pays goes into the governments pockets. Remember as Apple did and Amazon is going to do they agreed to refund the consumers prior to the government getting involved so no harm was done. But the government still fines them for their activities. It like the find that Google paid for bypass the private search feature in safari. no one was harm no on lost money but the government collected a fine.

post #30 of 33

We allowed our son to use the kindle to read a book, but he then proceeded to add around $100 of comic books to it.  We thought that we had set it up to block one click purchases, but you apparently had to do a lot to disable it.

 

I dont think that the assertion that this only happens to unaccountable parents is a fair statement.

post #31 of 33
Quote:
Originally Posted by euler View Post
 

We allowed our son to use the kindle to read a book, but he then proceeded to add around $100 of comic books to it.  We thought that we had set it up to block one click purchases, but you apparently had to do a lot to disable it.

 

I dont think that the assertion that this only happens to unaccountable parents is a fair statement.

 

Caveat emptor? It's incumbent upon the parent to carefully vet the device before handing it to a small person who has no impulse control.

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post #32 of 33

As if parenting isn't hard enough, now they have to be electronic device experts and administrators as well.

 

Consumer protection agencies exist because caveat emptor needn't always apply.  The seller has a responsibility to provide a reasonable product.

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post #33 of 33
Quote:
Originally Posted by SpamSandwich View Post

Instead of thoughtlessly ganging up, you should've actually read the legal decision.

And I quote:
Me again. That's a lot of weasel wording and sufficient evidence that NOT all of the money earmarked for consumers who were negligent in handing over their bank accounts to toddlers will receive 'every penny'... and I do not hesitate to mention I don't think anyone who foolishly let this happen deserves a refund anyway.

Thoughtlessly ganging up?! You asked for evidence and someone did provide you with one. That section you have posted was clear. I don't see any "weasel wording". My understanding of that text is similar to what Crowley posted.
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