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FTC Targets Amazon For Lax In-App Purchase Rules

The Federal Trade Commission has sued Amazon, claiming they unfairly charged parents for in-app purchases made by their children without permission.

By Matt Picht | July 10, 2014

If you own a smartphone, you're probably familiar with in-app purchases. Offering more levels, more credits or other perks for just a few bucks has become a popular way for developers to make money off of free-to-play apps.

These microtransactions can lead to some ... questionable purchasing decisions in adults. (Via Jezebel)

But when children start racking up hundreds of dollars on their parents' credit card, those questionable in-app purchases become potentially illegal. And that's when the Federal Trade Commission steps in.

A lawsuit filed by the FTC Thursday accuses tech giant Amazon of collecting millions of dollars from unauthorized purchases made on the company's Kindle Fire devices. 

The FTC claims Amazon's purchasing system doesn't require a password for every purchase, making it possible for children to buy virtual goods without their parents' permission. The suit cites two Amazon employees who described the ensuing complaints from parents as a "house on fire" situation. (Via Getty Images, Andy Ihnatko / CC BY NC ND 2.0

The agency argues cutting parents out of the purchasing loops counts as an unfair or deceptive business practice, and they've been cracking down on the behavior. Back in January, Apple agreed to refund $32.5 million to customers and change its app store policies after a similar FTC lawsuit. (Via Ars Technica)

And, to be fair, Amazon has also modified its app store to make it harder for children to accidentally purchase digital goods with real money — just not in the way the FTC wants, and without Apple's widespread refunds.

In a letter republished by The Next Web, an Amazon spokesman told the FTC the company has "produced not only an in-app purchasing experience that already meets the requirements of the Apple consent order, but the development of industry leading parental controls. ... Pursuing litigation against a company whose practices ... already meet or exceed the requirements of the Apple consent order makes no sense."

For now, whether or not Amazon really has gone far enough will have to be decided in court. Which leaves just one question: where's Google in all of this?

Google's own app store, Google Play, has faced similar criticism for having lax controls just like Apple and Amazon. In fact, the company is currently facing a class action suit over the issue. (Via  Mashable)

And since an email uncovered by Politico Thursday revealed an Apple lawyer basically tried to sic the FTC on Google a week after settling with the agency, it's a little baffling that Amazon wound up on the chopping block instead.

"If recent history is any guide — and Apple and consumer advocates have their way — Google may be next in the FTC's crosshairs."

In addition to FTC lawsuits, tech companies have also faced pressure to regulate their app stores from overseas. Both the E.U. and the U.K. have tightened their restrictions on in-app purchases over the past few months.

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