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FTC Sues Amazon Over Kids’ Unauthorized In-App Purchases

On the heels of its recent lawsuit against T-Mobile for unauthorized charges on customers' bills, the Federal Trade Commission is now going after Amazon for millions of dollars in allegedly unauthorized in-app charges made by children.

According to the FTC, the agency has filed suit against Amazon seeking refunds for unauthorized charges made by children on Amazon mobile devices without a parent's consent. The lawsuit also seeks a permanent injunction on Amazon's practice of billing parents for these allegedly unauthorized in-app charges.

Password Not Required for In-App Purchases

Amazon began allowing in-app charges with no password requirement for apps in the Amazon Appstore in November 2011, including many games that appeal to children, according to the FTC's complaint. Many of these apps were games that allegedly encouraged children to acquire virtual items, but often did not clearly distinguish between items that cost virtual money and those that cost real money.

Internal communications at Amazon, obtained by the FTC, showed that as early as 2011, Amazon employees noted that unauthorized in-app purchases were "clearly causing problems for a large percentage of our customers." However, the FTC alleges Amazon continued to allow the in-app charges with no password requirement. An update in March 2012 required a password only for charges of $20 or more, but still allowed unauthorized in-app purchases in some situations, the FTC claims.

In June of this year, Amazon changed its system to require authorization for all in-app purchases. But according to the FTC's complaint, Amazon refused to refund a majority of the millions of dollars' worth of unauthorized charges, even for the thousands of parents who have complained to the company about charges incurred by children -- some of whom did so by clicking "a lot of buttons at random."

'Expanding Mobile Area' Is Focus of FTC Efforts

The allegations in this complaint are also similar to allegations made by the FTC against Apple earlier this year. In that case, following an FTC complaint being filed, Apple agreed to refund more than $30 million in purchases made by children without authorization.

Under the terms of that settlement, Apple was also required to change its billing process to inform consumers any time they were being charged for an item sold in an app.

In announcing a settlement in the Apple case in January, the FTC noted that "the rapidly expanding mobile arena has been a focus of the Commission's consumer protection efforts."

If you have a consumer complaint or any unfair or fraudulent business practice, you can call the FTC complaint hotline at (877) FTC-HELP (877-382-4357) or file a complaint online.

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