Amazon to fight FTC on kids in-app purchases issue

By on July 3, 2014, 10:30 AM
amazon, ftc, parents, children, kids, federal trade commission, in-app purchases

Amazon says it's ready to fight a legal battle against the Federal Trade Commission to defend itself against allegations that it hasn't done enough to prevent kids from making unauthorized in-app purchases, and hence should make certain policy changes and pay fines.

In a letter sent to the FTC on Tuesday, Amazon, which faces a potential lawsuit by the government agency in federal district court, said that the agency's decision leaves the company "no choice but to defend our approach in court". 

According to the allegations, thousands of parents and other customers have complained about their kids making unauthorized in-app purchases, totaling hundreds of dollars in purchases in some cases.

The regulator agency says that there should be passwords for all in-app purchases, while notices and warnings should be more prominent, and refunds should be made simpler and easier. In a nutshell, the agency wants Amazon to adopt the same terms that Apple agreed to earlier this year.

The Cupertino-based company agreed to pay $32.5 million to settle a similar case brought by the FTC. The amount was distributed to the affected consumers.

"The commission is focused on ensuring that companies comply with the fundamental principle that consumers should not be made to pay for something they did not authorize," an FTC spokesman said.

On the other hand, Amazon, which began allowing in-app purchases in late 2011, says that refunds were never a problem. "When customers told us their kids had made purchases they didn't want, we refunded those purchases", said Andrew DeVore, an Amazon associate general counsel, adding that the company has already updated its app store to conform to the standards the FTC set for Apple.

The news comes a few weeks after the retailing giant unveiled the Fire Phone, which launches later this month.

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