Amazon faces FTC in-app payments investigation

The FTC has filed a lawsuit against Amazon over in-app payments

The Federal Trade Commission (FTC) has accused Amazon of allowing unauthorised in-app payments to go through, alleging that “billed parents and other account holders” for millions of dollars in bogus charges.

Included in the Federal Court lawsuit (PDF) is the demand that Amazon must provide refunds to all aggrieved account holders. Amazon takes a 30 percent cut when apps are bought through its platform, as well as in-app purchases.

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” said FTC chairwoman Edith Ramirez. 

“Even Amazon’s own employees recognised 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.”

Ramirez was referring to an internal email sent at Amazon that showed that the firm’s employees were aware of the issue and its likely complications.

In-app payments were “clearly causing problems for a large percentage of our customers”, according to the email, and the concern was that the situation was a “near house on fire”.

The FTC alleges that when Amazon first added in-app charges to the Appstore it did not ask for passwords before giving them out. It said that this ‘no password’ requirement extended to apps pitched at children, and that this ultimately left folks out of pocket.

The FTC said that thousands of people complained about charges, and following complaints added a password request for in-app charges over $20. This did little to stop the complaints.

A later change in 2013 saw one password prompt leave a window of purchasing opportunity stay open for 15 minutes. The FTC said that during this time a child could make “unlimited charges without further authorisation”.

It added that it was not until 2014, around two and a half years after launch, that Amazon moved to fix the issue, and the FTC said that it only did that after it ‘voted to approve the lawsuit against Amazon’.

V3 contacted Amazon for a response to the FTC’s filing but had recieved no reply at the time of publication.

This is the second complaint from the FTC that has taken on in-app charges at technology firms and it has already taken Apple for $32.5m. This week V3 reported that when Apple was fined, it suggested the FTC turn its attention to other providers, including rival Google.

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