Amazon Vows To Fight FTC Over In-App Purchases

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The FTC has been promised a legal fight after Amazon threatened to bring in the lawyers over in-app purchases

The controversy over in-app purchases could soon return to American courtrooms, after Amazon threatened to sue the US communications regulator, the US Federal Trade Commission (FTC).

In a letter to the FTC, Amazon warned the FTC it was prepared to go to court over a complaint lodged by the FTC against the e-commerce giant, warning it that purchases within apps were allowing children to rack up big bills while playing games, and it could face penalties similar to those imposed on Apple.

In-App Purchases

The problem started when the FTC tightened up the regulations surrounding the use of in-app purchases. It comes after a sharp rise in complaints about children purchasing items, often worth thousands of pounds, unbeknown to their parents.

Microsoft research last year estimated that children were using their parents’ smartphones to buy apps and make in-app purchases (IAP) valued at £30.9 million, or an average of £35 per family. 28 percent of parents said their children had bought an application without permission, and 83 percent of those said they had suffered “bill shock” as a result.

office business phone apps work suit © violetkaipa ShutterstockTo tackle the problem, the FTC is clamping down on the practice. In January this year, it fined Apple a minimum of $32.5m (£19.9m) as part of a deal to settle a FTC complaint involving in-app purchases made by children.

Tim Cook was reportedly furious that the FTC had made the settlement public, arguing that in affect the fine felt like double jeopardy, because Apple had already settled and refunded monies after a similar class-action lawsuit.

Amazon Warning

Amazon has taken note of these developments and has categorically warned the FTC it is prepared to go to court over charges it has not done enough to prevent children from making unauthorised in-app purchases. The FTC apparently alleges that children have made unauthorised purchases on Amazon tablets amounting to millions of dollars.

According to documents seen by The Wall Street Journal, Amazon wrote a letter to the FTC on Tuesday. It said it was prepared to “defend our approach in court,” rather than agree to fines and additional record-keeping and disclosure requirements over the next 20 years.

Amazon argues that it had already promptly refunded money to parents who complained, and that its parental controls go beyond that required by the FTC when it fined Apple.

“When customers told us their kids had made purchases they didn’t want, we refunded those purchases,” said Andrew DeVore, an Amazon associate general counsel, reportedly said in the letter to the FTC. He said Amazon’s app store included “prominent notice of in-app purchasing, effective parental controls and real-time notice of every in-app purchase.”

“The commission is focused on ensuring that companies comply with the fundamental principle that consumers should not be made to pay for something they did not authorise,” an FTC spokesman was quoted by the Journal as saying. “Consumers using mobile devices have the same long-established and fundamental consumer protections as they would anywhere else.”

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Author: Tom Jowitt
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