The FTC sues Amazon over in-app purchases, but unlike Apple, the company likely won't settle
Amazon has been sued by the Federal Trade Commission for allowing children to make in-app purchases without parental consent and racking up millions of dollars of fees in the process. The FTC is seeking refunds for customers affected by unauthorized in-app purchases and a court order requiring Amazon to receive permission before allowing someone to make in-app purchases.
The company has said before that it won't settle the case like Apple, which offered $32 million in refunds to consumers after the FTC filed a similar complaint against it, and that it's willing to take the case to court. It explained that in-app purchases are still new to the industry in a letter sent to the FTC on July 1 and claimed that settling would stifle innovation in the sector.
Amazon also claims in the letter that its own experimentation with in-app purchases meets all of the requirements of Apple's consent order and even offers more security features like Kindle Free Time, a feature that allows parents to limit their child's screen time and stop them from making in-app purchases or browsing the Web. It adds that it has refunded in-app purchases made by children in the past without having to reach a settlement with the FTC, so there's no reason for it to reach a similar settlement to the one Apple forged with the agency in January.
But that same experimentation is what allowed kids to make unauthorized in-app purchases in the first place. In 2011, the company didn't require a password for any goods bought in an application; in 2012 it required a password for purchases over $20; and in 2013 it finally started to ask customers for a password whenever they attempted to make an in-app purchase.
This means that children could rack up hundreds of dollars of fees without asking permission for two years -- half of the Amazon Appstore's lifespan. Does that seem like consumer-friendly experimentation, or like an attempt to encourage consumers to spend their hard-earned cash on digital goods? Having to enter a password to make an in-app purchase is frustrating; being charged hundreds of dollars for worthless purchases made because Amazon didn't want to ask for a password whenever someone wants to make an in-app purchase is downright horrifying.
Even the company's attempt to protect a parent's credit card by requiring a password for in-app purchases is fraught with problems. The FTC says in its complaint that Amazon requires a password for one in-app purchase; after it's been given, someone could make other purchases for "an unspecified duration (ranging from fifteen minutes to an hour) without seeking the account holder's password." This means that a parent authorizing one in-app purchase and then handing a tablet back to their child could still be taken for hundreds of dollars later on.
It's clear that Amazon needs to improve its in-app purchase policies. Though the company has made some improvements over the years, it has yet to create a system that won't screw parents for allowing their children to spend some time with a tablet. That might not have required a formal complaint from the FTC, but now that such a complaint has been filed anyway, Amazon might as well take the chance to prove that it still cares about consumer happiness despite its recent attempts to use consumers and authors as weapons in its ongoing fight with publishers.
[illustration by Brad Jonas]