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Summary Judgment Granted Against Amazon for In-App Charges Incurred by Children

Federal Trade Commission v., Inc., No. 2:14-cv-01038 (W.D. Wash.) April 26, 2016

The Western District of Washington granted summary judgment in the FTC’s suit against Amazon for billing consumers for unauthorized mobile in-app charges which were incurred by children. The full opinion can be viewed here.

The judge considered that there were surprise in-app charges, concluding that the company failed to sufficiently disclose the possibility of in-app charges in an otherwise “free” app. Specifically, as the Commission alleged, an app’s detail page would list either “FREE” or a specific dollar amount prior to initiating app installation. However, after an account holder installed an app, a user could incur in-app charges, including apps that children are likely to play. Although the app engages a “Charge Popup” warning of an in-app charge, a child can clear the Charge Popup by pressing the button labeled “Get Item,” incurring a cost. In many instances, Amazon does not request any further action before billing the account holder for the corresponding in-app charge.

Of note, the FTC reached similar settlements with Apple, Inc. and Google, Inc. relating to unauthorized in-app charges incurred by children, which resulted in orders requiring the companies to fully refund consumers for such charges, totaling over $50 million in refunds.

The order calls for further representations from the FTC and Amazon to determine the precise monetary relief Amazon will owe consumers as a result of these unlawful practices.

Takeaway: It is important that businesses clearly disclose any additional charges that may be incurred when using an App, especially when those Apps are potentially used by children.

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