Amazon Sued Over Billing for App Store Purchases 

Amazon building

Settling isn’t the Amazon way, whether the dispute is with book publishers or the federal government.

The Federal Trade Commission on Thursday filed a suit in a Federal District Court in Seattle, contending that Amazon improperly billed customers for “many millions of dollars” of charges that children made without their parents’ consent. The suit focuses on charges related to games downloaded through Amazon’s app store.

Amazon’s mobile store, the suit states, introduced the ability to bill customers within an application — so-called in-app charges — in November 2011, and did so without parental notifications or password requirements in children’s games. Often, the charges were for digital goods like coins, clothing, clues or tools that help a player progress through a game.

Jessica Rich, director of the agency’s Bureau of Consumer Protection, said in a conference call on Thursday that Amazon’s approach resulted in “sticking parents with unexpected bills in the hundreds of dollars.”

Ms. Rich said the charges led to “thousands of complaints that we know of.” In the discovery phase of its suit, she said, more complaints are likely to surface and the agency will be able to estimate more precisely the purportedly improper charges.

Apple faced similar accusations about its app store, and it settled with the F.T.C. in January, agreeing to better ensure parental approval of purchases and to pay at least $32.5 million in refunds to customers.

In the conference call, agency officials said they could not comment on private negotiations with Amazon and why no settlement had been reached.

But Ms. Rich said the F.T.C.’s goals in both the Apple and Amazon cases had been to seek full refunds and require informed consent. In the Amazon case, the agency is striving for an outcome “similar to the settlement with Apple,” Ms. Rich said.

Last month, the F.T.C. informed Amazon that it planned to sue, unless the company agreed to a consent order modeled after the Apple settlement. In a letter, dated July 1 and addressed to Edith Ramirez, the F.T.C. chairwoman, Andrew DeVore, associate general counsel of Amazon, criticized the agency’s “unwillingness to depart from the precedent it set with Apple.” The Amazon case, Mr. DeVore wrote, involved “very different facts,” so the company had “no choice but to defend our approach in court.”

After Amazon introduced in-app charges in late 2011, Mr. DeVore wrote, the company made several improvements. Yet even from the outset, he insisted, its approach was “responsible, customer-focused and lawful.”

In its suit, the F.T.C. rebuts that claim. The filing cites internal Amazon communications in December 2011 from an app store manager saying the in-app charges with few restraints were “clearly causing problems for a large percentage of our customers.” The manager called the situation a “near house on fire.”

Amazon declined to comment beyond Mr. DeVore’s letter.

Amazon has made a series of changes to its in-app purchases program. In March 2012, the company required a password for individual charges of more than $20, though it allowed unlimited purchases below that threshold, the F.T.C. complaint said. Further restrictions came later.

But the complaint said that it was not until June 2014, shortly before the commission voted to approve the suit, that Amazon changed its in-app purchase program to really obtain informed parental consent. That, Ms. Rich noted, was roughly two and a half years after the problem surfaced.

During that time, she said, parents who sought refunds faced an Amazon process that was “unclear and rife with deterrents.”

 

Source: NYT

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