Amazon to Refund up to $70M for In-App Purchases

Amazon is to refund up to $70 million of in-app purchases made by children without their parents' permission. It follows a hearing where a court previously agreed that the way Amazon's purchasing system worked was inherently unfair.

The case was brought by the Federal Trade Commission (FCC) back in 2014, and relates to so-called "freemium" apps on the Kindle Fire and some other Android devices. The word freemium is a portmanteau for "free" and "premium" and is often used to describe an app that would normally cost money, but instead includes ads or an option to purchase "upgrades" within the app instead. This can range from subscribing to a magazine in a newsstand app to buying tools to use in a game.

In one case, a game had an option to spend $99.99 on an in-app purchases. It seems highly likely that adults making informed decisions would rarely or ever do this and that the main "customers" were kids with little or no concept of mobile payments. In another case dated January 2016, Microsoft refunded a man $8,000 dollars after his son made unauthorized in-app purchases.

No Password Needed In Early Years

According to the FTC, Amazon didn't do enough to make sure kids using a parent's device weren't able to make purchases. The case originally covered purchases from the Amazon app store's launched in 2011, until the case was brought in 2014. The FTC notes that it wasn't until March 2012 that passwords were required for in-app purchases, and even so, only for purchases above $20.

Passwords were then extended to all in-app purchases the following year, though once a password had been typed in, the system didn't ask for it again for any purchases in the next 15 minutes. It wasn't until July 2014 that users were able to require a password for every purchase. The FTC says that until this point, Amazon had not done enough to ensure consent for the purchases. (Source: techcrunch.com)

Legal Delays Prove Costly

A court ruled in favor of the FTC's case last year, sparking off a series of appeals on both sides, including one from the FTC looking for an injunction. Amazon and the FTC have now agreed to end the legal process and begin the refunds. It appears that dragging the case out will cost Amazon, as it's now agreed to offer refunds for purchases up to May last year, nearly two years after the legal battle began.

The precise refund process hasn't been detailed yet, but if everyone eligible claimed for every purchase that qualifies, the bill could top $70 million. It's likely the refunds will have to be made as money rather than store credit, something Amazon had originally asked for. (Source: ftc.gov)

What's Your Opinion?

Where's the balance between parental responsibility and the responsibility of tech firms in this matter? Should $99.99 in-game purchases be barred completely or are they fine as long as buyers are definitely making an informed choice? Have you ever let a child use your device and if so, were you sure about whether or not they'd be able to make purchases on it without your knowledge?