Hunton Retail Law Resource

On April 27, 2016, a federal district court judge in the Western District of Washington ruled that the Federal Trade Commission (“FTC”) had proven that Amazon.com had engaged in unfair business practices in billing Amazon account holders for in-app charges without express, informed consent to such charges. At the same time, the judge denied the FTC’s request for a permanent injunction against Amazon, finding no cognizable danger of a recurring violation. The judge ordered additional briefing on calculating monetary relief.

The case arose from Amazon’s evolving disclosures, starting in November of 2011, of the ability to make in-app purchases through apps sold in Amazon’s Appstore. According to the opinion, the apps, many of which were geared toward and used by children, were either free to download or available for a fee, but permitted in-app purchases ranging from $.99 to $99.99. The opinion details the manner in which Amazon communicated the presence of in-app purchases to consumers over time, initially including voluntary parental controls and information in app description paragraphs, then moving to password prompts for larger purchases, disabling in-app purchasing on Amazon’s child-directed Kindle FreeTime service and, ultimately, to requiring passwords for such purchases.

The FTC filed its lawsuit against Amazon in July 2014, seeking an order requiring Amazon to refund consumers for the in-app charges. The FTC also asked the court to permanently ban Amazon from billing account holders for in-app charges without their consent. That same year, the FTC reached settlements with Apple Inc. and Google Inc. related to similar practices and requiring the companies to offer over $50 million in customer refunds.