Amazon ready to face FTC in court for in-app purchases of kids

By Aaron Mamiit, Tech Times | July 3, 6:44 AM

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Amazon, FTC battling over mobile in-app purchases

Amazon will face the FTC in court to battle fines from children making unauthorized in app purchases. Purchases are often made without parents' knowledge.
(Photo : Sam Churchill)

Amazon said that it is ready to challenge the United State Federal Trade Commission in court as the company refuses settlement on a policy change for in-app purchases made by children.

The FTC wants Amazon to agree to fines and adhere to the commission's demands for policy changes in how children can make in-app purchases using the accounts of their parents.

The commission wants Amazon and other technology companies to make the process of in-app purchases clear for consumers, so that their children will not accidentally run up their parents' bill by hundreds of dollars without asking permission. Included in the terms that the agency wants, which will cover a period of 20 years, are more visible notices for in-app purchases, password requirements and a better process for customer refunds.

These demands are similar to what Apple agreed to earlier this year, which included a $32.5 million settlement for in-app purchases that were made by children on their parents' iPhones and iPads. 

During that time, Apple users that wanted to make an in-app purchase need to re-enter the account's iTunes password to approve the purchase. Children who wish to make a purchase ask their parents to put in their password, and when the parent agrees, the sale will commence. However, the FTC said that it was not properly disclosed that after inputting the iTunes password, children will then have a 15-minute window in which additional in-app purchases made will not require the password to be inputted again.

Amazon responded to FTC's authorization of its staff to file a lawsuit against the company with a letter signed by Amazon Vice President & Assistant General Counsel Andrew DeVore.

"It's an understatement to say that this response is deeply disappointing," the letter wrote. "No one is more focused on creating a great experience for customers than Amazon." 

Amazon is arguing that the FTC should not base their decision on the policies that Apple was forced to change, because the company readily provides refunds to their customers for wrongly made purchases. 

"Pursuing litigation against a company whose practices were lawful from the outset and that already meet or exceed the requirements of the Apple consent order makes no sense, and is an unfortunate misallocation of the Commission's resources," Amazon's letter to FTC concludes.

The looming lawsuit will be an unfortunate turn of events for the company, as Amazon is preparing to release the Fire Phone, which will be its own line of mobile phones. The Fire Phone will use the Amazon App Store and ecosystem that is involved in this issue.

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