- The Washington Times - Thursday, July 10, 2014

The Federal Trade Commission is suing online retailer Amazon after thousands of parents complained to the company about accidental purchases their children made by using popular gaming apps.

According to the complaint filed Thursday, children racked up Amazon bills as large as $358.42 inside games on the company’s Appstore. In many cases, this happened without a prompt to enter a password or other confirmation that the account holder, usually a parent, agreed to the purchase.

“Companies need to get consumers’ consent before placing charges on their bills,” Jessica Rich, the FTC’s director of consumer protection, said in a conference call with reporters.

Amazon introduced charges inside its gaming apps in November 2011. In some children’s games, users suddenly had the ability to make purchases during game play. It was not always clear whether consumers were paying with real money or with “currency” from the game.

Internal communications cited in the FTC’s complaint show that Amazon employees realized the scope of the problem by December 2011, but the fixes to the consent forms were vague, and a single authorization opened a large window of time that allowed children to rack up many more charges.

Some purchases were made by children too young to read who “click[ed] a lot of buttons at random,” according to the complaint.

“What we’re trying to do is get refunds for consumers, not penalties,” Ms. Rich said. “We’re trying to put that money back into consumers’ pockets.”

Amazon keeps 30 percent of the money made by in-app purchases, according to the FTC.

A spokesman for Amazon declined to comment on the matter and instead referred to a July 1 letter from Amazon general counsel Andrew DeVore to FTC Chairwoman Edith Ramirez.

“In-app purchasing remains a new and rapidly evolving segment, and we have consistently improved the customer experience in response to data,” Mr. DeVore wrote. He added that the company issued refunds when customers reported that their children made the charges mistakenly.

Ms. Rich said, however, that consumers were frequently misled or given little assistance from Amazon if they sought refunds.

She said the “many millions in unauthorized charges” that the FTC sought in refunds was in addition to any refunds Amazon already issued to customers.

“For a more specific number, you’ll have to stay tuned to see what we find in litigation,” Ms. Rich added.

The FTC also is pursuing a lawsuit against cellphone service provider T-Mobile for what it says are unnecessary charges on customers’ bills.

Ms. Rich said all of this was a part of the FTC’s concern that, whether a business was online or a brick-and-mortar store, customers were not allowed to consent to charges before the purchases were made.

“We are very concerned with unauthorized charges,” Ms. Rich said. “We have been very concerned in many different contexts.”

An FTC lawsuit settled in January with Apple Inc. covered similar ground. In that case, Apple required a password to verify in-app purchases, but then allowed users to make additional purchases without confirmation for 15 minutes after the first entry.

The FTC said Apple did not sufficiently warn consumers about the 15 minutes of authorized purchases. Apple agreed to refund consumers a minimum of $32.5 million, according to a statement from the FTC.

Mr. DeVore said in his letter that the two companies deserved to be judged differently.

“The Commission’s unwillingness to depart from the precedent it set with Apple despite our different facts leaves us no choice but to defend our approach in court,” he wrote.

Though asked by reporters, Ms. Rich declined to comment on the actions of companies such as Google, which also have in-app purchases for programs in the Android store that have hazy boundaries of consumer consent.

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