3 On Your Side: FTC Sues Amazon Over Children's Unauthorized In-App Charges
By Jim Donovan
PHILADELPHIA (CBS) -- They downloaded gaming apps without their parents' permission, yet the parents still had to foot the bill! Now for the second time this year, the Federal Trade Commission is going after a company that allowed it to happen. As 3 On Your Side Consumer Reporter Jim Donovan tells us, this time target of the FTC is Amazon.
Nine-year-old Ryan Marshall loves playing games on his parents' phone. The game apps are free, but to progress in the game you have to pay. That's something Ryan did without his mother knowing. Something that took LaShawn Marshall off guard when she logged onto her bank account. She says, "there's 300 dollars missing. I don't remember spending this type of money."
"Unbeknownst to parents, their kids could rack up hundreds of dollars of charges simply by clicking buttons in Amazon apps," says Malini Mithal with the FTC's Bureau of Consumer Protection. The FTC, in its lawsuit, alleges that Amazon billed parents for millions of dollars in unauthorized charges like this. According to Mithal, "Amazon continued to allow children to rack up these charges failing to provide parents basic information. This was problem, people raised it as a problem, and Amazon still did not fix the issue."
In an internal Amazon email in 2011, obtained by the FTC, an Amazon app store manager admitted: "We're clearly causing problems for a large percentage of our customers" calling the level of complaints a "near house on fire."
Amazon began requiring passwords in 2012, but left open an initial 15-minute window during which kids could still make purchases without permission. The FTC says that Amazon keeps 30 percent of the money made in all in-app charges.
By the way, if this sounds familiar that's because Apple settled similar charges with the FTC earlier this year.
Here is a link to the FTC lawsuit:
http://www.ftc.gov/system/files/documents/cases/140710amazoncmpt1.pdf