Amazon Liable for Children's In-App Purchases, Court Rules
April 27 2016 - 6:40PM
Dow Jones News
Amazon.com Inc. is liable for in-app purchases children made
years ago without their parents' authorization, a federal court
ruled late Tuesday.
The Seattle retailer didn't provide sufficient safeguards to
prevent children from making purchases within apps that were free
to download, according to the U.S. District Court for the Western
District of Washington state. The Federal Trade Commission filed
the case against Amazon in 2014, citing thousands of complaints
about unauthorized in-app charges for virtual goods or services,
totaling hundreds of dollars in some cases.
"Given the design of the Appstore and procedures around in-app
purchases, it is reasonable to conclude that many customers were
never aware that they had made an in-app purchase," the court
said.
Amazon has since taken measures to prevent such purchases and
said it has reimbursed customers who lodged complaints. But the
ruling means Amazon will face additional monetary penalties, which
will be determined later.
An Amazon spokesman didn't respond to a request for comment.
The FTC had reached settlements with Apple Inc. and Alphabet
Inc.'s Google in 2014 about similar unauthorized in-app purchases
for $32.5 million and $19 million, respectively. But Amazon chose
instead to challenge the agency in court. Today, those app stores
require customers to type in their password for in-app purchases,
which may include new levels or characters in a game or additional
music options.
App stores, such as the one on Amazon's Fire tablet computers,
are a key battleground among tech firms. In addition to storing
valuable user information, such as credit card numbers, companies
also keep a 30% cut of purchases made through the app stores,
making them a lucrative revenue stream.
The court rejected Amazon's argument that its customers weren't
affected because it liberally provided refunds.
Amazon won one aspect of the case. Though the FTC sought to
require more consent from Amazon customers, the court ruled Amazon
had implemented sufficient safeguards since the case began.
Write to Greg Bensinger at greg.bensinger@wsj.com
(END) Dow Jones Newswires
April 27, 2016 18:25 ET (22:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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