Amazon to Refund Parents Whose Children Made In-App Purchases Without Permission
In 2014, the Federal Trade Commission sued Amazon on behalf of millions of parents whose kids spent money on in-app purchases without permission, on the grounds that the tech company made it far too easy for children to run up unlimited charges without any kind of permission from the account holder. Now, a federal judge has ruled that Amazon needs to set up a payment plan for the eligible customers to begin in 2017, Reuters reports.
The FTC alleged that, beginning in 2011, Amazon’s lack of parental permission guards resulted in $86 million in unauthorized charges for mobile games targeted toward kids like "Ice Age Village," and subsequent updates to the in-app purchase process did little to fix the issue. According to the FTC, "kids’ games often encourage children to acquire virtual items in ways that blur the lines between what costs virtual currency and what costs real money." A 2012 update to the charge system limited the amount of money kids could spend without parental permission, but still allowed charges of up to $20 without any kind of approval from a parent’s account. Internal communications from Amazon show that employees knew the extent of the problem, and likened the situation to "near house on fire."
A U.S. district judge in Seattle found the company liable in April 2016, and has now ordered the company to begin paying out eligible customers. Regulators had argued for a $26.5 million lump-sum payout, but the judge found those damages to be too high. Instead, the company will have to alert customers who are eligible starting next year, and begin reimbursing them in cash (not gift cards, as Amazon requested).
Amazon is not the first tech company to be held accountable for profits reaped from kids buying digital goods without their parents’ knowledge. Apple and Google have previously been targeted by the FTC over similar issues, and began paying refunds out in 2014.