Amazon has been challenging an order by the Federal Trade Commission (FTC)for past three years demanding the e-tailer to refund unauthorised in-app purchases, until last week. The case has now finally reached termination with Amazon kneeling down against the Commission. It has agreed to refund all unauthorised in-app purchases made by kids between November 2011 and May 2016, the further details of reimbursement to be announced shortly.
The total refund amount counts to $70 million in total for Amazon. FTC went after the company in 2014 appealing the court that the e-tailer bills the parents via inappropriate in-app purchases made by their children. It argued that the consent of parents was not generated prior the charges were levied through in-app purchases on the Kindle and Fire tablets, sometimes wheeling up huge bills. The commission had asked Amazon to introduce password protected purchases and other security measures post the case was forwarded.
In one of its appeal in 2014, FTC had stated,
Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission, even company’s own employees recognized the serious problem its process created.
In its defence, Amazon resisted the charges stating pre-integration of secure payment channels and adequate controls coupled with purchase notifications. It also came up with reimbursement through Amazon gift cards and online credits, so that customers can garner the payment directly into their credit/debit cards.
Flagging the hefty refund amount on Amazon, Thomas B. Pahl, acting director of the FTC’s Bureau of Consumer Protection, said in a release,
This case demonstrates what should be a bedrock principle for all companies — you must get customers’ consent before you charge them, Consumers affected by Amazon’s practices can now be compensated for charges they didn’t expect or authorize.
The FTC’s action against Amazon followed similar cases filed against Apple Inc. and Google Inc. related to unauthorised in-app charges incurred by children requiring the companies to fully refund consumers for such charges. It will be interesting to contemplate how the U.S. based retailing giant reimburses the refunds to the U.S. citizens.
