Amazon Unfairly Billed Parents for Their Kids' In-App Purchases, a Judge Rules

The key question in the legal battle was whether Amazon's app store made it too easy for children to buy virtual goods with real money inside games labeled as "free" without parental permission.

Following the launch of the Amazon app store in 2011, the company fielded thousands of complaints about unauthorized charges made by children in apps where they could purchase virtual items, the FTC alleged in a suit seeking refunds for consumers.

The practice was unfair because the e-commerce giant's disclosures about in-app purchases didn't do enough to explain to consumers what they were authorizing, the agency argued.

Amazon, whose founder Jeff Bezos also owns The Washington Post, has changed the in-app purchase interface over the years and added more parental controls, according to court filings. It also said it refunded consumers who complained.

In a ruling Tuesday, a federal judge granted the FTC a summary judgment that found the tech giant responsible for the charges.

"[W]hile entering a password linking her Amazon account to a new device, a reasonable consumer unaware of the possibility of in-app purchases would not assume she was authorizing unforeseen charges," US District Judge John Coughenour wrote in his order.

FTC Chairwoman Edith Ramirez praised the decision. "We are pleased the federal judge found Amazon liable for unfairly billing consumers for unauthorized in-app purchases by children," she said in a press statement.

The court has yet to weigh in on just how much Amazon will have to pay back to consumers to settle the liability.

But Coughenour also granted a partial summary judgment for Amazon. Citing the steps the company had already taken to rectify the situation, the judge denied an FTC request for injunctive relief that would have required Amazon to obtain more thorough consent for in-app purchases.

Amazon did not immediately respond to a request for comment on the judge's decision.

Amazon's competitors in the app market space also faced similar inquiries from the FTC but decided not to head to court. In 2014, Apple agreed to settle charges related to unauthorized in-app purchases made by children to the tune of full consumer refunds of at least $32.5 million, while Google also settled for consumer refunds of $19 million.

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