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Thursday, July 10, 2014, 10:49 am PT (01:49 pm ET)

Amazon, not Google, next to face FTC's wrath over in-app purchases by children

The U.S. Federal Trade Commission on Thursday announced that it has filed suit against retail colossus Amazon, alleging that the company allowed children to rack up millions of dollars in unauthorized in-app purchases through the Amazon Appstore — charges similar to those brought against Apple last year.




Federal regulators are asking the United States District Court for the Western District of Washington to issue an order directing Amazon to refund parents for unauthorized purchases and ban the company from allowing purchases without the parents' consent in the future. Amazon's conduct was particularly egregious, the commission believes, because internal emails show that Amazon employees knew of the problem but took only token steps to resolve it.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," FTC Chairwoman Edith Ramirez said in a release. "Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

At least one employee of Seattle, Wash.-based Amazon sent an email to colleagues in December 2011 saying that unauthorized in-app purchases were "clearly causing problems for a large percentage of our customers" before describing the situation as "near house on fire," according to the FTC complaint.

The company later altered the behavior of in-app purchases, requiring authorization for any transaction over $20. That seems to have done little to help matters, as another employee again used the "house on fire" metaphor when referring to customers' complaints in July 2012.

Amazon then changed its policies to match those agreed to by Apple in the iPhone maker's $32.5 million settlement with the commission, but the FTC says Amazon continues to refuse refunds and instead puts parents through a "refund process that is unclear and confusing." The commission approached Amazon with a settlement offer prior to filing suit, but Amazon instead chose litigation.

Along with refunds, the commission is also asking for "disgorgement of Amazon's ill-gotten gains."