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The Federal Trade Commissioner filed a complaint accusing Amazon of billing parents for millions of dollars from unauthorized in-app purchases made by children.
Apps made for children allowed them to make purchases without the consent of account holders or passwords, ending up with millions of charges, and in doing so violated the FTC ACT. The federal agency filed a lawsuit to force Amazon to refund parents.
"Amazon's in-app system allowed children to incur unlimited charges on their parent's accounts without permission," FTC chair Edith Ramirez said. "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."
Since the introduction of in-app purchases three years ago, games marketed towards children have included virtual currency or items available at any price up to $99.
Amazon employees clearly felt it was a problem early on noting that not requiring a password was "...clearly causing problems for a large percentage of our customers."
Eventually Amazon began requiring account holder consent for purchases over $20, but made no changes to charges under that amount. In the FTC complaint, an employee said that "it's much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product."
Yet another change in 2013 to the system still allowed for a short window of time after the input of a password for further purchases to be made without continually typing it in. One customer has alleged her daughter was able to spend more than $350 through in-app purchases.