FTC sues Amazon for allowing kids to make unauthorized in-app purchases

[Justin Kahn]

The Federal Trade Commission has now filed the complaint we were expecting against Amazon for allowing kids to make in-app purchases too easily without parental consent. The complaint, filed on Thursday, says the company has allowed for millions of dollars worth of unlawful in-app purchases made by youngsters without the knowledge of parents or account holders. The main issue seems to be that it is just too simple for children to make in-app purchases without the proper security measures for parents.

The FTC claims the company began receiving complaints almost directly after launching the service, and notes that one Amazon employee said the following month that allowing for purchases of this nature without a password was "clearly causing problems for a large percentage of our customers." The FTC says the unauthorized purchases range from $0.99 all the way up to $99, and amounted to hundreds of dollars at a time in some cases. 

Amazon has changed its policy on the issue several times since it began allowing in-app purchases in late 2011. Even with Amazon taking 30% of in-app purchase revenue, the company began to implement light security measures including requiring a password for purchases over $20 the following year and then cracked down a little more in 2013. However, it wasn't not enough for the FTC which claims that Amazon required a password, but only for some purchases and in certain situations. In some cases, a single password authorization would sometimes open a window of time where real money purchases could be made freely.

Apple had a similar run in with the FTC earlier this year and ended up forking over $32.5 million to customers based on unauthorized purchases by children. Amazon recently wrote to the FTC expressing its disappointment with the decision and pointing out that it has consistently updated its policy in order to better the experience for customers. Amazon’s associate general counsel, Andrew DeVore, said the company has now already met the requirements imposed on Apple, but the FTC seems to feel its too late at "roughly two and a half years after the problem first surfaced."

Permalink to story.

https://www.techspot.com/news/57391-ftc-sues-amazon-for-allowing-kids-to-make-unauthorized-in-app-purchases.html

 

[cliffordcooley]

"However, it wasn't not enough"

LOL - Someone didn't proof read!

 

[GhostRyder]

How is this Amazons fault again or Apples? This sounds like someone pushing the blame for not paying attention to the companies.

 

[cmbjive]

I don't know what Amazon app allows in-game purchases without a password for anything under $20, but the Amazon app I use requires me to enter my password anytime I make an in-game purchase. It seems lazy *** parents who don't want to discipline their kids are instead using the government to punish companies that are legitimately operating a business.

 

[Gamesinner]

Thank goodness the government is here to help me stop my little Johnnie from making in-app purchases. :-/

 

[Mister_K]

Seems like FTC is on a suying spree recently :/

 

[misor]

Bad marketing, bad parenting, or bad government regulation? take your pick.

 

[Camikazi]

I don't know what Amazon app allows in-game purchases without a password for anything under $20, but the Amazon app I use requires me to enter my password anytime I make an in-game purchase. It seems lazy *** parents who don't want to discipline their kids are instead using the government to punish companies that are legitimately operating a business.

I believe you have to turn the parental password thing on since it is default off. This doesn't make Amazon guilty it just makes parents lazy and want to look for someone else to blame.

 

[cliffordcooley]

I believe you have to turn the parental password thing on since it is default off.

Spending money should never be enabled by default with a single click. If that is the case it is Amazon's fault.

As someone who hates passwords, and never uses them unless I'm online. Even then I try to make use of cookies, so my browser logs in automatically. I certainly don't get mad when having to use a password that protects my bank account balance. Anyone that is not willing to use passwords every time they make a purchase, is not very responsible and shouldn't complain if anything disappears. And for those of us that want a password by default for protection, stop saying we are lazy for thinking if was safe by default.

If what you say is true @Camikazi. Yes it does make Amazon guilty. You shouldn't have to opt-in to make purchasing more secure. You opt to make them less secure, when you don't need the extra security.

 

[captaincranky]

Spending money should never be enabled by default with a single click. If that is the case it is Amazon's fault.....[ ]......

I hate to be the myth buster here, but Amazon's single click purchasing requires you to be logged in. If a customer is of the lazy variety and clicks, "remember me", then ostensibly he or she is permanently logged in.

Every time I click,

Sign in to turn on 1-Click ordering.

I have been led to a sign in page. period.

So, if people are logged in permanently, it serves them right. And it follows logically, they need as much babysitting as their children.

I never have sites, "remember me", browse in "privacy mode", and have my machines "clear all cookies on shutdown". Plus, no one other than me uses my computers.

So, I couldn't get myself charged for something at Amazon with one click, if my life depended on it.

 

[cliffordcooley]

I hate to be the myth buster here, but Amazon's single click purchasing requires you to be logged in. If a customer is of the lazy variety and clicks, "remember me", then ostensibly he or she is permanently logged in.

Yes and forum software also requires an additional login to the moderation panel as protection. I find it hilarious that a site forum would secure its users far better than Amazon secures it users. I'm sure there is someone out there that will find this an irrelevant analogy because they missed the point.

Doesn't being logged in to Amazon have benifits other than purchasing? If not then I should retract my statement, as being logged in only serves to make purchases. That is border-line to fearing for your Pay-Pal account when wanting to stay logged in to eBay. There are so many things you can do while logged into eBay, connecting Pay-Pal by default would be ridiculous. Why not forget about all these middle men and simply put in your bank account info when you login? I mean seriously whats the point in using a middle man, if you are not going to be protected while being logged in? You might as well be logged into your bank, each time you want to review a product, or ask questions about a listing.

 

[captaincranky]

Yes and forum software also requires an additional login to the moderation panel as protection. I find it hilarious that a site forum would secure its users far better than Amazon secures it users. I'm sure there is someone out there that will find this an irrelevant analogy because they missed the point.

Fear not Cliff. I get it.

Doesn't being logged in to Amazon have benifits other than purchasing? If not then I should retract my statement, as being logged in only serves to make purchases. .

I think being logged into Amazon serves Amazon's purposes, more than the customer's. The site starts calling you by name, so you'll think they're your personal besties.

So, IMHO, a log in with no intent to purchase, is really an opportunity for Amazon to run adware on your computer, nothing more.

 

[tipstir]

On July 1st 2014,

Audible 888-283-5051 NJ
Check your BC, CC or DC statements this month or any month for this new scam from Amazon if you use Kindle (Audio Book feature) on your PC, Tablet or Smartphone.

Amazon Audible Company had a monthly charge fee is $14.99, If you see the Audible on your billing statement call that number above. Stay on the phone and tell them you just got this notice on your account. Tell them you don't know anything about this and would like this refunded ASAP!

Again unauthorized and I never gave Amazon any permission to charge my account for this service. What a racket. I am just letting you all know what's Amazon is doing to get more money from you.

I had caught this in time today 7.9.14 my refund being processed.

Update: Got an email from Audible telling me they where cancelling my Gold Account with them and where sorry I was leaving them and refunded my money! Oddly enough never signed up for such account. in the first place!

 

[cliffordcooley]

Is Amazon trying to build a coffin?

 

[Camikazi]

Spending money should never be enabled by default with a single click. If that is the case it is Amazon's fault.

As someone who hates passwords, and never uses them unless I'm online. Even then I try to make use of cookies, so my browser logs in automatically. I certainly don't get mad when having to use a password that protects my bank account balance. Anyone that is not willing to use passwords every time they make a purchase, is not very responsible and shouldn't complain if anything disappears. And for those of us that want a password by default for protection, stop saying we are lazy for thinking if was safe by default.

If what you say is true @Camikazi. Yes it does make Amazon guilty. You shouldn't have to opt-in to make purchasing more secure. You opt to make them less secure, when you don't need the extra security.

Maybe you are right but I learned long ago to check settings and options to see what is on or off at any new site. Might just be me but this doesn't bother me since it is something I would check off as soon as the account is made. I don't assume things like this are on by default with humans being human, a greedy board or an actual mental slip could be the reason either way I check first so I don't get screwed later.

 

[cliffordcooley]

Maybe you are right but I learned long ago to check settings and options to see what is on or off at any new site.

You have a point, but that still doesn't void Amazon's guilt in how they default their settings. For one reason, not everyone knows their way around the options panel and some options are often over looked. If every site had the same options panel, it would be different.

Lets not loose sight of the fact, I have nothing against the option for a one-click purchase. I just don't think an account should be defaulted this way. The one-click should be an opt-in option, placing blame on the individual of the account. Not a form of Amazon getting money from everyone who has kids, that didn't think (or know it was necessary) about manually locking their accounts. And if Amazon has intentionally opened this door, that makes them guilty.

 

[Darth Shiv]

How is this Amazons fault again or Apples? This sounds like someone pushing the blame for not paying attention to the companies.

Because those companies setup predatory purchasing tactics. They marketed devices and systems with credit cards registered to accounts then deliberately didn't protect the devices from unauthorised purchases. There were weak mechanisms to distinguish users from authorised CC users.

It's a deliberate scam and it is great that the FTC is knocking them on the head for it.

 

[GhostRyder]

Because those companies setup predatory purchasing tactics. They marketed devices and systems with credit cards registered to accounts then deliberately didn't protect the devices from unauthorised purchases. There were weak mechanisms to distinguish users from authorised CC users.

It's a deliberate scam and it is great that the FTC is knocking them on the head for it.

I would not call that a scam so much, I mean the parents are the ones handing out phones, tablet, or the likes to kids without the kids understanding not to do that or leaving it with their cards ready to purchase. Would it be different if a kid held their parents wallet and a store next door was having a sale on toys? Would you blame the store for letting the kid purchase stuff or the parent for not keeping an eye out?

It still falls under the parent to keep an eye on things or to make sure the kid understands this sort of stuff.

 

[cliffordcooley]

Would it be different if a kid held their parents wallet and a store next door was having a sale on toys? Would you blame the store for letting the kid purchase stuff or the parent for not keeping an eye out?

Parenting used to be simple! Tell your kid what to do and they did it, because they knew what the consequences were. Now there are no consequences because all the adults are either negligent or cowards. Cowards afraid of child abuse charges.

I know a guy that told his wife, he couldn't tell his sons they had to go on a trip with them. The sons were given a choice and the wife wanted to go but only if the sons went. He already had a first offense because the wife had previously called the sheriff on him a year or so before over a family feud. I don't know all the details but I do know that was the last day he considered himself as having power over his sons. That is something the sheriff's office took from him, the minute they arrived.

My father had a similar event with my sister 25-30 years ago with the city police. I even heard another guy (cousin's husband) actually tell city police, he was afraid to take action. This gives kids power over parents and they know it.

 

[captaincranky]

I would not call that a scam so much, I mean the parents are the ones handing out phones, tablet, or the likes to kids without the kids understanding not to do that or leaving it with their cards ready to purchase. .

You know, it really is high time somebody put the brakes on Amazon. Their CEO is a nut case and a megalomaniac. This is the guy who claims, "we know what you're going to buy before you buy it", and then wants to ship it to your front door with a fleet of toy helicopters. After that is, shipping it around the corner from your house, before you've even placed the order. Well, that's pandering to people who, "want immediate infantile gratification", and this is the generation that believes as gospel, they're entitled to it. Ripe for the picking, as it were.

Where does any sliver of ethics enter into Amazon's modus operandi?

I'd have to say their transactional business practices are exemplary, from a moral standpoint, not so much.

So, (IMHO), whichever portion of your business you perform unethically, you should face sanctions for it.

Parenting used to be simple! Tell your kid what to do and they did it, because they knew what the consequences were. Now there are no consequences because all the adults are either negligent or cowards. Cowards afraid of child abuse charges.

I know a guy that told his wife, he couldn't tell his sons they had to go on a trip with them. The sons were given a choice and the wife wanted to go but only if the sons went. He already had a first offense because the wife had previously called the sheriff on him a year or so before over a family feud. I don't know all the details but I do know that was the last day he considered himself as having power over his sons. That is something the sheriff's office took from him, the minute they arrived.

My father had a similar event with my sister 25-30 years ago with the city police. I even heard another guy (cousin's husband) actually tell city police, he was afraid to take action. This gives kids power over parents and they know it.

Gosh, this just made me feel terribly old. When I was growing up the rule of thumb was, "spare the rod and spoil the child"....

 

[GhostRyder]

Parenting used to be simple! Tell your kid what to do and they did it, because they knew what the consequences were. Now there are no consequences because all the adults are either negligent or cowards. Cowards afraid of child abuse charges.

I know a guy that told his wife, he couldn't tell his sons they had to go on a trip with them. The sons were given a choice and the wife wanted to go but only if the sons went. He already had a first offense because the wife had previously called the sheriff on him a year or so before over a family feud. I don't know all the details but I do know that was the last day he considered himself as having power over his sons. That is something the sheriff's office took from him, the minute they arrived.

My father had a similar event with my sister 25-30 years ago with the city police. I even heard another guy (cousin's husband) actually tell city police, he was afraid to take action. This gives kids power over parents and they know it.

Maybe, it still ends up coming down to parents letting them have this power in the end. If you show no fear and what not then the kid will assume that he/she should fear the parent and respect them. Sure most kids these days are spoiled a lot more than I was but I feel some of this at least comes from the parents who let their kids get away with stuff and let the fear instill. Even with nosy neighbors or people who think its morally wrong to (ill grab this quote from @captaincranky )
"spare the rod and spoil the child" its their own fault for letting the neighbors beliefs/morals get in the way of your parenting. I know that some neighbors/kids/adults push beliefs about calling the cops for harmless things or the kid making up stories but they had to get the idea from somewhere and had to believe they can overpower their parents in some way. We can blame society for many of the recent short comings but I feel that if a parent is assertive and dominant enough then the kids grows up correctly and learn to respect authority.

As with the case of the Amazons pruchase, yes I feel they should require a passcode default to purchase (Like my iPhone does) but still the kid should know better and the parent should be paying attention and making sure things like this do not happen.

 

[captaincranky]

....[ ].....As with the case of the Amazons pruchase, yes I feel they should require a passcode default to purchase (Like my iPhone does) but still the kid should know better and the parent should be paying attention and making sure things like this do not happen.

Well, I would take you to task on this particular point. They really haven't built the child, who at some point, doesn't want to see how much they can get away with...

Another sad point about today's world, the people who are the least qualified to have children, breed the most.

A friend of mine put it this way, (more than forty years ago), "we federally subsidize the breeding of an entire segment of the population, we'd be better off without"!

 

[Darth Shiv]

I would not call that a scam so much, I mean the parents are the ones handing out phones, tablet, or the likes to kids without the kids understanding not to do that or leaving it with their cards ready to purchase. Would it be different if a kid held their parents wallet and a store next door was having a sale on toys? Would you blame the store for letting the kid purchase stuff or the parent for not keeping an eye out?

It still falls under the parent to keep an eye on things or to make sure the kid understands this sort of stuff.

That is exactly the point. It is *NOT* a wallet they are giving out. It is like building the wallet into a gameboy, Wii, Playstation etc.

And no, the expectation that a parent can keep up with tech like this is also a misnomer. Not everyone is into IT. Not everyone cares about it as much as people on this forum.

That is why I say it is a scam. It is a trap for people who aren't tech savvy for which a LOT of people fit into that category.

 

[cliffordcooley]

That is why I say it is a scam. It is a trap for people who aren't tech savvy for which a LOT of people fit into that category.

Exactly!

 

[GhostRyder]

That is exactly the point. It is *NOT* a wallet they are giving out. It is like building the wallet into a gameboy, Wii, Playstation etc.

And no, the expectation that a parent can keep up with tech like this is also a misnomer. Not everyone is into IT. Not everyone cares about it as much as people on this forum.

That is why I say it is a scam. It is a trap for people who aren't tech savvy for which a LOT of people fit into that category.

The parent is still handing the kid the smartphone/tablet/PC or whatever device is within these issues and expecting things to magically play out after putting their credit card on it. Or even if the parent is handing them the device to use for fun its still up to the parent to understand how at least the basics work in this day and age. I know people are not always generally tech savy in all respects but you still should be keeping a watchful eye on things and if nothing else at least learn the basics.

Computers/tablets/smartphones/etc are something that kids want and get at really young ages because its an easy thing for entertainment purposes or "Safety" (Notice the quotes which that comments is mostly aimed at the phones). You still should understand enough to make sure your kid does not find a way to exploit something. You teach a teenager not to run a car into the garage, teach you a kid not to buy random junk using their parents credit card on the app store. If they are not old enough to understand not to do that, then chances are they are to young for the device.