Amazon has agreed to refund $70 million to parents who were charged for unauthorized purchases made by their children using an app.
In an announcement Tuesday by the Federal Trade Commission, Amazon decided not to appeal District Court Judge John C. Coughenour's ruling on April 16 that the e-commerce powerhouse illegally billed customers for the purchases.
The judge, who serves in the Western District in Seattle, agreed with the FTC that Amazon didn't inform consumers that children could make purchases inside a free game app.
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In the court documents in the judge's order, it was revealed: "a child may be prompted to use or acquire seemingly fictitious currency, including a 'boatload of doughnuts, a can of stars and bars of gold,' but in reality the child is making an in-app purchase using real money."
Also, according to the documents: "In developing its Kindle Fire tablet, Amazon identified 'soccer parents' as a key target customer base, referring to them as 'low-hanging fruit.' "
The purchases were made between November 2011 and May 2016.
Amazon said it will reveal the refunds process "shortly," according to an FTC release.
In that same ruling, the court denied the FTC's injunction request to forbid Amazon from similar conduct in the future. The judge also rejected an FTC request of $26.5 million in damages from Amazon.
"This case demonstrates what should be a bedrock principle for all companies — you must get customers' consent before you charge them," said Thomas B. Pahl, acting director of the FTC's Bureau of Consumer Protection, in a statement. "Consumers affected by Amazon's practices can now be compensated for charges they didn't expect or authorize."
In 2014, the FTC also settled cases against Apple Inc. and Google Inc. related to unauthorized in-app charges incurred by children. Those refunds were a combined $51 million.
By Allen Cone
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