Amazon Fighting FTC Over In-App Purchases Fine

An anonymous reader writes One of the common problems of the smartphone generation has been parents who given their phones to children, who then rack up hundreds of dollars of in-app purchases without the parents' knowledge. The FTC smacked Apple with a fine for this, and Google is facing a lawsuit as well. Now, Amazon is the latest target, having received a complaint from the FTC demanding a similar settlement to Apple's. Amazon, however, is not willing to concede the fine; they plan to fight it. Amazon said, "The Commission's unwillingness to depart from the precedent it set with Apple despite our very different facts leaves us no choice but to defend our approach in court (PDF). The main claim in the draft complaint is that we failed to get customers' informed consent to in-app charges made by children and did not address that problem quickly or effectively enough in response to customer complaints. We have continually improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn't want, we refunded those purchases."

It's not just the refund

[Todd Knarr]

I think Amazon's problem is going to be that just refunding the purchases doesn't help the parents. If the kid maxes out the credit-card on in-app purchases, the parents have to deal not just with those purchases but the fees and interest from over-limit charges on the card and/or the additional costs associated with any declined charges (eg. if I pay a bill on-line using my card and the charge is declined, I get hit for late fees and possibly service disconnections). Having this happen when you're out-of-town (eg. the kid does this while the family's on vacation, and when you go to check out of the hotel you can't pay your hotel bill and you have to figure out why without being able to check your accounts on-line to see what unexpected charges are there). The only acceptable way of handling things is what Amazon should've done from the start: once parental controls are turned on in an app, all actions that would cause a charge or affect parental controls always require a PIN (and ideally there'd be an option to say "don't allow charges period until parental controls are turned off again").

It's Intended

[The New Guy 2.0]

The problem here is that parents/kids don't have enough authentication to block purchases being made by the wrong person... there really should be better security like face recognition to say "Uhm, kid, that costs money!" or "Parent, you can't spend your kid's money for them!"

Re:It's not just the refund

[Xenx]

People aren't willing to accept responsibility for themselves and their kids. We shouldn't be forcing the companies to accept the responsibility instead. If you don't agree with how Amazon does it, don't buy their devices or use their appstore. If they feel they're losing too many customers based on their business practices.. they'll change them. Either way, they shouldn't be targeted by the FTC.

Re:It's not just the refund

[tomhath]

I suppose it depends on how old the kids are. But really, if the kid is old enough to have their own phone then the parents need to do some better parenting. The first step I would take is to give them a Tracfone. Don't like being uncool? Learn that actions have consequences.

Re:It's Intended

[maeka]

in some cases they're no better than gambling (ie: buy tokens to feed into this jackpot like system to win a random digital item!)

Not that I disagree with you, but what part of the gaming industry isn't preying off of exactly the same neurons as gambling? Nearly every game, be you buying the game itself, in-game purchases, or DLC, is getting its revenue almost entirely due to exploiting pleasure-seeking behavior.

Re:The Amazon AppStore Auto-consent

[itsdapead]

What is next, blame Ford because your kid was able to steal your keys off your dresser and wreck the car while you are sleeping?

...if Ford made the key fob in the shape of a cartoon character with a voice chip that kept saying "Hey kids! Pick me up and lets go for a drive" then, maybe.

Yes, parents should take responsibility for their kids - but that doesn't give businesses the right to exploit their slightest lapse.

Re:The Amazon AppStore Auto-consent

[Anonymous Coward]

If the parental controls do not work then indeed the company should be blamed. and resetting the password on updates is a bug. what if Ford came with seatbelts on the backseats that needed to be re-fastened by the soccer-mom at random intervals to avoid them not working in case of emergency? Cars are recalled for mistakes like that.

Re:The Amazon AppStore Auto-consent

[eclectro]

They know about it. It isn't a bug, it is a feature that enables profits.

The games are purposefully engineered to be faulty so that you are *required* to make an in app purchase. And with the 'one click' nature of the in app purchases, it is easy for the game to make a purchase for you - either by mistake or by design!

Re:It's not just the refund

[Xenx]

If you can't take the time to learn how to use your tablet, you shouldn't use the tablet. If your kids don't know how to use the tablet, they shouldn't use the tablet. It really isn't too much to ask people to actually be at least halfway responsible with their choices. Admittedly, I am technical support for an ISP... and I'm a bit jaded. But, I get to see some of the worst when it comes to people not understanding the first thing about the devices they feel they NEED to have.

Re:It's Intended

[JMJimmy]

The pleasure seeking isn't the problem, it's the money->chance->loop. When you buy a game outright/DLC/etc it's a fixed cost no matter what actual mechanics are in the game. The moment you buy tokens (or gems or whatever name they want to put on it) and you're feeding it into something that has any sort of random generator it creates an entirely different dynamic. Companies would have a vested interest in tweaking the "randomness" of an item/game mechanic/etc.

Same issue arises with non-random items. Take a game that sells health packs - the developers could tweak damage output without the user knowing to encourage more purchases.

Re:The Amazon AppStore Auto-consent

[sjames]

THIS!

All of the excuses about how parents should know how the device works and blah blah blah cannot overcome this. Even if the parents do exactly what the scolds demand, Amazon goes behind their back and un-does it, contrary to reasonable expectation.

Re:um... how bout...

[A Li N]

Partially agree with you here. It's a new age and these 'expensive toys' are quickly becoming the needed tools in life; teaching your kids how to use them and the consequences of their actions is a great lesson for any child. Teaching yourself how they are, and can be, used is an even bigger lesson; one that a lot of parents fail at and then blame someone else. Who, in their responsible mind, would give a child a device that can be used to spend money? Yes, there's some checks and balances in place, but those checks and balances fail all the time (which is why my un-signed credit card can be used to purchase things without asking to see my Id 95% of the time). If you give your kid a credit card and put them in a candy store, they're going to max it out. Is that the store owner's fault? No! If you want your kids to be able to purchase those in-app purchases, set up an account for them with a specific amount on the card (Google Wallet is a very good option with its Master Card option). It's called an allowance, a concept that's been around for hundreds of years. You don't give an allowance by writing and signing a blank check. People (who most parents are) need to start learning the technology they use, where its downfalls are and how to get around them. If Amazon's in-app purchase policy is 'enter your pin and it's OK to purchase for 15 minutes', learn to deal with that or use a different system. If Amazon's updates cause resetting of in-app purchase flags, learn to deal with it. Part of dealing with it is to inform Amazon that their policy is broken, but it's their policy to make; if you don't like it, move on to the next or learn how to deal with it to fit your needs.