FTC Sues Amazon over In-App Purchases by Children

The Federal Trade Commission filed suit Thursday against Amazon, alleging the retail giant made it too easy for minors to ring up millions of dollars in unauthorized in-app purchases. The suit, filed in the U.S. District Court of Western Washington, seeks refunds for parents whose children made purchases, and a court order that would require Amazon to get parental consent before future purchases.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," FTC Chairwoman Edith Ramirez said in a statement. "Even Amazon's own employees recognized the serious problem its process created."

'House on Fire'

According to the suit, Amazon began receiving complaints from parents just weeks after it began billing for in-app purchases. One Amazon Appstore manager described the number of complaints as being "near house on fire." As early as December 2011, the manager said the practice of allowing the charges to be made without any password was "clearly causing problems for a large percentage of our customers." Thousands of consumers eventually complained about the charges, the FTC said.

The Seattle-based company offers apps through its Appstore, a digital store preloaded on the Kindle Fire, which provide services such as the ability to watch TV shows, check the weather, or play games. Amazon receives 30 percent of the revenues from in-app purchases, which can range from $0.99 to $99.99, and can be incurred multiple times. Amazon also charges users for certain activities within the apps, including games that children may play.

The FTC complaint alleges that children are often encouraged to acquire virtual items within the games, with the difference between virtual currency and real money often blurred. In the app "Ice Age Village," for example, the complaint noted that children can use "coins" and "acorns" to buy items in the game without a real-money charge....

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