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

Posted:
in General Discussion edited July 2014
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."
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Comments

  • Reply 1 of 32
    gatorguygatorguy Posts: 23,168member
    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
  • Reply 2 of 32
    wovelwovel Posts: 956member
    It is really odd that Apple, Amazon and I am sure eventually Google are being blamed for bad parents.
  • Reply 3 of 32
    wovel wrote: »
    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.
  • Reply 4 of 32
    dasanman69dasanman69 Posts: 13,001member
    wovel wrote: »
    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.
  • Reply 5 of 32
    wovelwovel Posts: 956member
    dasanman69 wrote: »
    wovel wrote: »
    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.
  • Reply 6 of 32
    If Amazon ends up paying a fine of $32.5 million that would be devastating to their profits that quarter. Maybe even that half.
  • Reply 7 of 32
    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.
  • Reply 8 of 32
    john.bjohn.b Posts: 2,740member
    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.


  • Reply 9 of 32
    SpamSandwichSpamSandwich Posts: 33,408member
    There goes Amazon's "profits" for the past three years!
  • Reply 10 of 32
    magman1979magman1979 Posts: 1,222member
    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.
  • Reply 11 of 32
    magman1979magman1979 Posts: 1,222member
    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.
  • Reply 12 of 32
    maestro64maestro64 Posts: 5,005member

    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.

  • Reply 13 of 32
    nasseraenasserae Posts: 3,166member
    maestro64 wrote: »
    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.
  • Reply 14 of 32
    SpamSandwichSpamSandwich Posts: 33,408member
    nasserae wrote: »
    The $32 millions Apple paid were refunds. It didn't go to the government...

    Do you have proof supporting that theory?
  • Reply 15 of 32
    gatorguygatorguy Posts: 23,168member
    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.
  • Reply 16 of 32
    How... How is this possible?
    I thought Amazon and the US Government had..."an understanding." :wow:
  • Reply 17 of 32
    rob53rob53 Posts: 2,638member

    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.

  • Reply 18 of 32
    gatorguygatorguy Posts: 23,168member
    rob53 wrote: »
    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?
  • Reply 19 of 32
    nasseraenasserae Posts: 3,166member
    Do you have proof supporting that theory?

    Not a theory.. It's a fact. Check the link provided by Gatorguy.
    gatorguy wrote: »

    Thanks for saving me the time ????
  • Reply 20 of 32
    isammiisammi Posts: 8member
    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!
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