Regulators sue Amazon on billing practices for in-app purchases

Now it’s Amazon’s turn.

The Federal Trade Commission announced Thursday that it was suing Amazon in federal court alleging that the retail giant illegally billed parents millions of dollars for purchases. At issue are “in-app” purchases, virtual items children make while using an application on an Amazon device such as the Kindle Fire.

Amazon has already said it will fight the FTC and that its parental controls are more than adequate.

The FTC settled with Apple in January on the same issue. Apple agreed to pay $32.5 million to parents. The company also took the opportunity to point regulators to an article about Google’s own practices, as I wrote about Wednesday.

The FTC says that although Amazon made several changes to its billing process since the problem first surfaced more than two years ago, it only recently changed its policy to obtain a user’s “informed consent” for in-app charges on newer mobile devices. One mother reported having to pay more than $300 for virtual goods her daughter bought without her consent.

According to a statement from FTC Chairwoman Edith Ramirez:

Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission. 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.

The FTC is seeking  a court order to require Amazon to refund consumers for these purchases.

Above: Amazon CEO Jeff Bezos.  (Spencer Platt/Getty Images)

Michelle Quinn Michelle Quinn (186 Posts)

Michelle Quinn is a Business Columnist at the San Jose Mercury News. Prior to her current role, she was the Silicon Valley correspondent at Politico covering tech policy and politics. She has also covered the tech industry at the Los Angeles Times and the San Francisco Chronicle. She was a blogger for the New York Times.