FTC Sues Amazon for Letting Kids Spend Parents’ Money

By on

It’s too easy for kids to use mobile devices to make app purchases on Amazon without their parents’ permission. That’s the basis of a Federal Trade Commission lawsuit filed this week against the online retail giant.

The FTC said Amazon has allowed millions of dollars of unauthorized purchases by children through its app store. According to The Huffington Post:

“In total, parents and other Amazon account holders have suffered significant monetary injury, with thousands of consumers complaining about unauthorized in-app charges by their children, and many consumers reporting up to hundreds of dollars in such charges,” the lawsuit, filed in the U.S. District Court for the Western District of Washington, contends.

In-app purchases allow customers to purchase virtual items – like coins, stars, extra levels or songs, or game hints – within a free or paid game or app. However, it can sometimes be difficult to decipher whether the items cost real dollars or virtual game currency, especially for children.

In-app purchases cost between 99 cents and $99.99, HuffPo said. Amazon keeps 30 percent of revenue from in-app charges.

Amazon began billing for in-app charges in November 2011, the complaint said. However, according to The Wall Street Journal, it wasn’t until June 2014 that Amazon required consumers’ informed consent on its newer devices for all in-app purchases.

The FTC is seeking an undetermined amount in refunds from the online retailer, as well as a requirement that Amazon gets informed consent from parents before kids can make in-app purchases. According to the WSJ, Amazon told the FTC it wouldn’t agree to tighter controls. The Journal wrote:

Amazon associate general counsel Andrew DeVore said in a letter to the FTC that Amazon’s practices “were lawful from the outset and … already meet or exceed the requirements of the Apple consent order.” Amazon declined to comment beyond the letter.

Earlier this year, we told you that as part of a settlement with the FTC, Apple agreed to refund a minimum of $32.5 million to customers after children racked up millions of unauthorized in-app purchases. Apple also agreed to revise its billing practices to ensure that in-app purchases had informed consent from consumers.

I have a friend whose 7-year-old son used his Kindle Fire to rack up hundreds of dollars of in-app purchases on Amazon without her knowledge. She didn’t dispute the charges with Amazon, but she did have a serious discussion with her son about making in-app purchases on Amazon without asking her permission first.

Has your child made app purchases without your consent? Share your experiences below or on our Facebook page.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,276 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • grandmaguest

    Perhaps that is another VERY good reason why underage kids should not have access to the internet on cell phones or tablets. If you absolutely, positively must give your child (or even high schooler) a cell phone, you can limit them to talk only. They certainly do not need to have internet on their phone….and as far as I’m concerned they don’t need text either. There are too many kids posting things that will cause lots of problems….cyber bullying, sexting and so forth. If you need to get hold of your child while they are at school…..do what we did and call the principal.

  • KaraLynn

    Since this topic can very quickly and easily tangent to a parenting debate, I’ll try to be brief. My children will never, repeat, never be handed an electronic device as a means of entertainment. No device, no unauthorized purchases.