News

Government sues Amazon over kids’ purchases

Government sues Amazon over kids’ purchases

AMAZON:The lawsuit, filed by the Federal Trade Commission, seeks to make the online retailer refund money spent without parental permission and to end Amazon's practice of allowing purchases without requiring a password or other mechanism that gives parents control over their accounts. Photo: Reuters

By Diane Bartz

WASHINGTON (Reuters) – The U.S. government sued Amazon.com on Thursday for allowing children to collectively run up millions of dollars in purchases on the credit cards of their unsuspecting parents while playing mobile apps like “Tap Zoo” and “Ice Age Village.”

The lawsuit, filed by the Federal Trade Commission, seeks to make the online retailer refund money spent without parental permission and to end Amazon’s practice of allowing purchases without requiring a password or other mechanism that gives parents control over their accounts.

The unauthorized charges are often associated with children’s apps, such as games, that can be free to download but allow players to make in-app purchases by buying “coins” or other digital products with the credit card associated with the device, the FTC said in its complaint.

The FTC complaint cited “Tap Zoo” and “Ice Age Village” in which children manage a zoo or an ancient town. To do that, they can purchase digital items that often cost real money. A user put a review on Amazon.com in July 2013 complaining that “Tap Zoo” was a “cash trap” and said his son spent $65 on it without permission. The game currently tells parents how to disable the purchasing function.

The apps run on Amazon’s Kindle Fire, Kindle Fire HD and devices that use Google’s Android operating system.

The FTC settled a similar case with Apple Inc in January. Apple agreed to refund to customers at least $32.5 million in unauthorized charges made by children and to change its billing practices to require consent from parents for in-app spending.

Amazon declined comment, and referred reporters to a letter that its vice president and associate general counsel, Andrew DeVore, wrote to FTC Chairwoman Edith Ramirez dated July 1.

In the letter, DeVore protested the FTC’s threat to file a lawsuit against the company if it did not agree to a consent order along the lines of the one reached with Apple in January.

DeVore also said the FTC threat to sue “leaves us no choice but to defend our approach in court.”

The FTC said in its lawsuit that Amazon responded to complaints about unauthorized charges by requiring passwords for large purchases in 2012. That was extended to all purchases in 2013, but once a password has been entered, a purchase window remains open for up to an hour, meaning that further charges could be made without parents’ knowledge, the complaint said.

The complaint quotes an Amazon official as saying shortly after the program began: “We believe that parents are excluded from the buying process for these apps.”

Some parents said their children spent hundreds of dollars without their knowledge, the complaint said. Amazon bills for the in-app purchases and keeps 30 percent of the charges, the complaint added.

Amazon.com shares were down 0.7 percent at $327.48 in afternoon U.S. trading.

(Additional reporting by Deepa Seetharaman; Editing by Ros Krasny, Bill Trott and David Gregorio)

Recent Headlines

in Local

U of I Economist: Farmers Who Rent May Need To Re-Negotiate

corn

A University of Illinois Economist says farmers who rent may have to renegotiate their terms due to fall in profits.

in Local

Thousands of Gallons of Used Cooking Oil Stolen: 3 Arrested

gavel2

Three men have been arrested for stealing cooking oil from restaurants to sell to biodiesel plants.

in Local

Prison Time For Former Custodian: Sex With Special Ed Student

jail

A former Jr. High custodian goes to prison for sex with a 15-year-old special education student.

in Local

Minimum Wage: Illinois Workers Demand Increase

Fast Food Workers Convention

Illinois Fast Food Workers demand an increase in the state's minimum wage.

in Local

Potential for Severe Weather Today in Central Illinois

tornado

Potential threat of severe weather this afternoon through tonight in Springfield and Central Illinois.