Technologist - The FindLaw Legal Technology Blog

Amazon to Refund $70 Million for Kids' Purchases

It was the $358.42 charge on her credit card that caught the attention of one Amazon customer.

According to a complaint by the Federal Trade Commission, the woman didn't know that her child had racked up unauthorized charges to her account. So the agency sued Amazon on behalf of everybody whose children were allowed to "spend unlimited amounts of money to pay for virtual items within the apps such as 'coins,' 'stars,' and 'acorns' without parental involvement."

After three years of litigation, Amazon has agreed to refund up to $70 million for unauthorized charges made by children. The company is sending refund notices by email now.

No Consent

It seems like a no-brainer that minors should not be able to authorize charges against their parents' accounts. Maybe that's why Apple and Google, which were joined in the action, settled early in related litigation.

It took a judge granting a summary judgment to get Amazon off the dime. Amazon will pay up to $70 million, while Apple agreed to pay $32.5 million and Google, $19 million.

Technically, the district court found that Amazon failed to get the parents' consent for in-app charges made by their children. The judge stayed its order requiring the refunds while the parties considered appeals, which they withdrew in their settlement.

"This case demonstrates what should be a bedrock principle for all companies -- you must get customers' consent before you charge them," said Thomas B. Pahl, acting director of the FTC's Bureau of Consumer Protection.

There's an App for That

Apple, which allows children to buy apps and downloads through its online store, says parents can set restrictions on their kids' devices. Its website also describes a feature to control purchases.

"Ask to Buy allows you to review and approve purchases, including in-app purchases and downloads requested by your child," it says. "This feature is enabled automatically for users under 13 or equivalent minimum age depending on jurisdiction."

After the court ruling, Amazon said it was disappointed in the decision but that it had improved its parental controls.

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