Last year, we reported that a federal judge had found Amazon liable for charging customers for unauthorized in-app purchases made by the customer’s respective children in an action filed by the Federal Trade Commission (“FTC” or the “Commission”). This week, the FTC announced that both Amazon and the Commission will withdraw their appeals in the action, ending litigation that we originally blogged about in 2014.
What Does the Withdrawal of Appeals in this Action Mean to My Business?
Thomas B. Pahl, acting director of the FTC’s Bureau of Consumer Protection, stated, “This case demonstrates what should be a bedrock principle for all companies — you must get customers’ consent before you charge them . . . . Consumers affected by Amazon’s practices can now be compensated for charges they didn’t expect or authorize.” According to the FTC, as a result of the earlier finding of liability against Amazon, more than $70 million may be available in a refund pool for affected consumers. Details on the refund pool, which Amazon will operate, will be announced soon.
In-App Purchasing? Protect Yourself
Amazon is not alone in allowing children to make in-app purchases. As the FTC’s announcement notes, Apple, Inc. and Google, Inc. recently settled similar claims with the FTC. And, as we have previously reported, Facebook has faced a class action lawsuit involving comparable practices. As a result, companies that allow children to make in-app (or online) purchases are advised to provide some mechanism for first obtaining parental consent before billing, or they too will soon likely face significant liability.