Amazon and the Federal Trade Commission have agreed to drop their appeals in a lawsuit accusing the online retailer of billing consumers for unauthorized in-app charges incurred by children.
But Amazon fought back, and on July 2014 the agency filed a lawsuit in which it alleged that Amazon’s App Store did not require the use of a password for in-app charges between November 2011 and March 2012, including in children’s apps. Even when the company updated its system to require a password for an in-app purchase, it still permitted an unlimited number of smaller purchases without parental approval, the FTC said.
A federal court judge granted summary judgment in favor of the FTC last April, ruling that the company failed to obtain parental consent for the in-app charges made by their children. The court denied the Commission’s request for an injunction, however. Both parties appealed to the U.S. Court of Appeals for the Ninth Circuit and the district court stayed its order requiring Amazon to begin the refund process.
Now that the parties have agreed to end the litigation, the refund process—involving an estimated $70 million of in-app charges made between November 2011 and May 2016—will begin shortly. The FTC said details about the process will be released soon.
To read the joint motion for voluntary dismissal in FTC v. Amazon.com, Inc., click here.
Why it matters: “This case demonstrates what should be a bedrock principle for all companies—you must get customers’ consent before you charge them,” Thomas B. Pahl, Acting Director of the FTC’s Bureau of Consumer Protection, said in a statement. “Consumers affected by Amazon’s practices can now be compensated for charges they didn’t expect or authorize.”