Privacy & Cybersecurity Law Blog

On July 10, 2014, the Federal Trade Commission announced that it filed a complaint against Amazon.com, Inc. (“Amazon”) for failing to obtain the consent of parents or other account holders prior to billing them for in-app charges incurred by children. According to the complaint, Amazon, which offers children’s apps through its Appstore, bills Amazon account holders in real money for virtual items that children obtain within an app (i.e., “in-app” charges).

The FTC argues that the apps at issue “invite children to obtain virtual items in contexts that blur the line between what costs virtual currency and what costs real money.” The FTC alleges that Amazon:

• failed to obtain parents’ or other account holders’ express informed consent to the in-app charges incurred by children, and continued to allow the purchases notwithstanding media reports about children incurring unauthorized charges in similar apps from other mobile app stores; and
• did not implement password requirements on in-app charges associated with kids’ games and other apps that appeal to children.

Amazon received thousands of complaints from parents about millions of dollars of in-app charges incurred by children without their authorization. In the press release accompanying the complaint, FTC Chair Edith Ramirez noted that the FTC is “seeking refunds for affected parents and a court order to ensure that Amazon gets parents’ consent for in-app purchases.”