ARTICLE
5 August 2014

FTC Sues Amazon For Unlawful Billing Of Unauthorized In-App Purchases By Children

KM
Klein Moynihan Turco LLP

Contributor

Klein Moynihan Turco LLP (KMT) maintains an extensive practice, with an international client base, in the rapidly developing fields of Internet, telemarketing and mobile marketing law, sweepstakes and promotions law, gambling, fantasy sports and gaming law, data and consumer privacy law, intellectual property law and general corporate law.
According to the FTC, Amazon.com, Inc. offers a variety of children's apps in its "appstore" that are available for download to mobile devices.
United States Media, Telecoms, IT, Entertainment

AMAZON.COM IN-APP SYSTEM:

  • According to the Federal Trade Commission ("FTC"), Amazon.com, Inc. ("Amazon") offers a variety of children's apps in its "appstore" that are available for download to mobile devices.

FTC COMPLAINT:

  • The FTC commenced a lawsuit against Amazon for violations of the FTC Act.
  • The crux of the complaint alleges that Amazon billed parents and other account holders millions of dollars for unauthorized in-app charges incurred by children.
  • Specifically, the complaint alleges that certain in-app purchases by children did not require their parents' consent, and when the company first introduced in-app purchases, there were no password requirements to authorize charges.
  • The FTC alleges that kids' games often encourage children to accumulate virtual items in a manner that blurs the lines between what is actual money versus virtual currency.
  • According to internal communication records, the FTC claims that Amazon's employees were aware of the problem of permitting unlimited in-app purchases without a password.
  • Despite Amazon's gradual efforts to update its in-app charge system between 2011 and 2013, it was not until 2014 that the company changed the framework to obtain the account holder's informed consent for in-app charges.
  • The FTC claims that thousands of parents complained to Amazon about the charges that their children had incurred without their permission.

RELIEF SOUGHT:

  • Under the complaint, the FTC is seeking: 1) a full refund for all affected consumers; 2) disgorgement of revenue; and 3) a court order ensuring that in the future, Amazon will get permission before in-app purchases may proceed.

TAKE AWAY:

  • Marketing products to children is a delicate business, requiring strict attention to state and federal laws and regulations.
  • This is the FTC's second case relating to children's in-app purchases. Earlier this year, the FTC settled a case concerning this issue with Apple Inc.
  • For guidance on conducting the proper marketing and business campaign, it is important to consult with experienced counsel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More