FTC Brings Similar Charges Against Amazon as Apple for Kids' App Purchases

PHOTO: The Kindle FreeTime app displayed on a Kindle Fire HDX is seen in this undated photo provided by Amazon. Amazon/AP Photo
The Kindle FreeTime app displayed on a Kindle Fire HDX is seen in this undated photo provided by Amazon.

Amazon is being accused by the feds of billing parents for millions of dollars in their children's unauthorized in-app purchases.

The accusations brought by the Federal Trade Commission today in federal district court are similar to those against T-Mobile last week for unauthorized "cramming" fees and charges against Apple that were settled earlier this year for children's purchases in the Apple App Store. Apple and FTC announced an agreement on Jan. 15 that it would pay a minimum of $32.5 million in refunds to consumers.

The FTC's complaint against Amazon is seeking an unspecified amount of money in refunds for Amazon customers for their kids' unauthorized charges for apps, of which Amazon keeps 30 percent as profit, the FTC said in a statement. The commission alleges that when Amazon introduced in-app charges to the Amazon Appstore in November 2011, the company did not require passwords for in-app charges, such as the use of virtual currency in children's games.

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The children's app “Ice Age Village,” for example, allows children to use “coins” and “acorns” to buy items in the game without a real-money charge and additional “coins” and “acorns” with real money, the FTC said. Meanwhile, the app's largest quantity purchase available is $99.99.

The FTC invites parents who have experienced unauthorized in-app purchases to contact the commission at ftc.gov/complaint.

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On July 1, Amazon wrote a letter to FTC Chairwoman Edith Ramirez, calling the charges a "disappointment."

"The Commission's unwillingness to depart from the precedent it set with Apple despite our very different facts leaves us no choice but to defend our approach in court," wrote Andrew C. DeVore, Amazon's general counsel.

A spokeswoman for Amazon said it had nothing further to add outside of the July 1 letter.

DeVore wrote that Amazon officials believed they had "constructive" meetings with Ramirez over several weeks and already refunded customers for unauthorized in-app purchases.

"And as we have made clear from the outset of your inquiry, our experience at launch was responsible, customer-focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service," DeVore wrote.

The FTC said it has received "thousands" of complaints against Amazon related to this issue.