Amazon Sued By FTC Over Kids’ In-App Purchases

Updated on Inc. (NASDAQ:AMZN) is being sued by the Federal Trade Commission over its in-app purchase policies. The lawsuit, which was filed in a court in Seattle, Washington, is similar to one which Apple Inc. (NASDAQ:AAPL) settled earlier this year. The Cupertino company handed over more than $30 million in order to rid itself of the FTC’s attention.

The regulators allege that the current policies employed by Inc. (NASDAQ:AMZN) allow children to spend unlimited amounts of their parents money using in-app purchases. The technology, which allows consumers to purchase digital goods inside of applications, is widespread on Amazon’s Kindle Fire devices.

Amazon rejects criticism Inc. (NASDAQ:AMZN) responded with a letter to the FTC defending its policies on in-app purchases. The company has a strong belief in the strength of its in-app purchase policies, and is apparently willing to fight for its right to keep them the way they are in court.

“We have continuously 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.” The letter, which was signed by the company’s attorney Andrew DeVore, went on to say that the response from the FTC was “deeply disappointing.”

The FTC says that Inc. (NASDAQ:AMZN) only improved its policies marginally over the last number of years, and waited until earlier this year, under pressure from the Federal Trade Commission, to bring its in-app purchasing policies in line with those idealized by the regulator.

In-app purchases continue to come under fire

Regulations around in-app purchases are objected to by Apple Inc. (NASDAQ:AAPL) and Inc. (NASDAQ:AMZN) because the more difficult and time consuming it is to make a purchase the less likely a customer is to follow it to completion. Apple Inc. (NASDAQ:AAPL) decided to settle its case with the FTC, and paid $32.5 million to the agency for the privilege.

According to the FTC letter, however, Inc. (NASDAQ:AMZN) is not unduly perturbed by the Apple Inc. (NASDAQ:AAPL) ruling. “Pursuing litigation against a company whose practice are lawful from the outset and that already meet or exceed the requirements of the Apple consent order makes no sense and is an unfortunate misallocation of the Commission’s resources,” according to Mr. DeVore.

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