Amazon Unfairly Billed Consumers for in-App Purchases by Children, Judge Rules

Amazon illegally charged parents for in-app purchases made by children without getting parents' informed consent, a federal judge ruled Tuesday, granting a summary judgment to the FTC, which filed a lawsuit against the company in July 2014. U.S. District Judge John Coughenour in Seattle rejected Amazon's arguments that its customers were familiar with the company's procedures to avoid in-app purchases -- which are charges made inside an app typically downloaded for free -- or they could have pursued refunds. FTC Chairwoman Edith Ramirez in a statement Tuesday announcing the judgment said that "we look forward to making a case for full refunds to consumers as a result of Amazon's actions." The commission had pursued similar cases against Apple and Google (see 1409050102). The judgment, which was redacted heavily in certain areas, didn't list FTC's calculated consumer damages, which Amazon said were "untimely and/or speculative," but Coughenour asked from both parties information about how much the company owes consumers in relief. He said customers "were never aware that they had made an in-app purchase" given the App Store's design and procedures for in-app purchases. He said it was "unreasonable to expect customers to be familiar with the potential to accrue in-app purchases while using apps labeled as 'FREE.'" Amazon said customers could have avoided charges through parental controls, said the judgment. But Coughenour wrote that Amazon's "stated policy" wasn't to provide refunds for in-app purchases "so many customers would have reasonably believed such recourse was not available to them." The time they spend trying to get a refund also "constitutes additional injury," he said. Amazon started charging customers beginning November 2011 but started receiving numerous complaints from parents, the judgment said. Amazon didn't comment. However, TechFreedom President Berin Szoka said in a statement that "if this decision stands, the web's going to get a lot less user-friendly and a lot more ugly." The decision gives the FTC "sweeping powers as a nanny-state censor of interface design decisions," he said. The court ceded responsibility to check commission discretion, he added.