Feeds

Bezos house 'on FIRE': Amazon in-app kiddy megabuck charge storm

FTC prepares boot for firm's ass in lawsuit

Gartner critical capabilities for enterprise endpoint backup

The US Federal Trade Commission (FCC) has filed a lawsuit against mighty online etailer Amazon, claiming the business's in-app purchase system wrongly charged consumers millions of dollars.

The suit also claims Bezos & Co knew about the problem and did nothing to rectify it.

"As internal emails uncovered in our investigation reveal, immediately after Amazon introduced in-app charges its own employees advised that Amazon was 'clearly causing problems for a large percentage of our customers,' even referring to the problems as 'near house on fire'," FTC consumer protection director Jessica Rich told a press conference on Thursday.

"That happened in December 2011, right after Amazon started in-app charges. According to the complaint even seven months later Amazon employees again discussed the 'house on fire' situation. For years, despite this very real consumer issue Amazon also allowed children to run up unlimited charges without their parent's knowledge or permission."

In March 2012, Amazon changed its systems to require parental consent for in-app purchases over $20, while allowing unlimited purchases below that figure. Typically, these purchases are for weapons, power-ups and other gumble in games on mobiles and tablets.

An email obtained by the FTC says one employee noted "it's much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product," the court documents [PDF] state

A year later, Amazon tweaked its in-app purchasing system again, but the FTC claims that even this modification was opaque. For example, while a password was required for some in-app purchases, doing so opened up a purchasing window of between 15 minutes to an hour for further purchases after initial consent had been given.

That, we're told, was ample time for kids to spend much more of their parents' cash than expected.

Thousands of Amazon customers complained to the web biz and the FTC about the company's charges, and this prompted the watchdog's action.

"Amazon has received thousands of complaints related to unauthorized in-app charges by children ... amounting to millions of dollars of charges," the lawsuit paperwork states.

The regulator is not seeking a fine from Amazon – just a sum that can be used to refund customers who have been hit with unauthorized charges, and used to enforce formal oversight of the company's practices for an unspecified period.

Amazon has always said that in the event of unauthorized charges it provides full refunds. But Rich claimed that the refund process was "unclear and confusing," and placed many hurdles in the way of those seeking reimbursement.

This is the second case the FTC has brought against technology firms over in-app purchases: Apple settled its case with the agency in January and agreed to pay a $32.5m fine and accept 20 years of federal oversight. Amazon said last week that it would not accept a similar fate, and will fight its case in court.

Rich denied that the FTC was gunning exclusively for technology companies, saying bricks-and-mortar businesses that aren't transparent about giving consent for charges will also be prosecuted if they did not give consumers informed consent for billing.

Nevertheless, Google is likely to be next in the FTC's sights over in-app purchasing. Apple has reportedly fingered the advertising goliath to the FTC and, when questioned on the issue, Rich refused to confirm or deny that the Chocolate Factory in under investigation.

Amazon was unavailable for comment at time of going to press. ®

Boost IT visibility and business value

More from The Register

next story
UK fuzz want PINCODES on ALL mobile phones
Met Police calls for mandatory passwords on all new mobes
Munich considers dumping Linux for ... GULP ... Windows!
Give a penguinista a hug, the Outlook's not good for open source's poster child
EU justice chief blasts Google on 'right to be forgotten'
Don't pretend it's a freedom of speech issue – interim commish
Hello, police, El Reg here. Are we a bunch of terrorists now?
Do Brits risk arrest for watching beheading video nasty? We asked the fuzz
Detroit losing MILLIONS because it buys CHEAP BATTERIES – report
Man at hardware store was right: name brands DO last longer
Snowden on NSA's MonsterMind TERROR: It may trigger cyberwar
Plus: Syria's internet going down? That was a US cock-up
UK government accused of hiding TRUTH about Universal Credit fiasco
'Reset rating keeps secrets on one-dole-to-rule-them-all plan', say MPs
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
e-Borders fiasco: Brits stung for £224m after US IT giant sues UK govt
Defeat to Raytheon branded 'catastrophic result'
Yes, but what are your plans if a DRAGON attacks?
Local UK gov outs most ridiculous FoI requests...
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.