FTC sues Amazon over in-game purchases by children


Online retailer Amazon is accused of hooking millions of dollars from underage users making unauthorized in-app purchases. The Federal Trade Commission filed a lawsuit Thursday charging that the company willingly allowed kids to set up purchases without the consent of their parents.

Though most were for smaller ammounts, some of the charges ranged as high as $99, and typically were for game weapons, clothes and other virtual bullshit installed on its Kindle Fire gadget.

"Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission," FTC Chairwoman Edith Ramirez wrote in a press release issued by the comission. "Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

Amazon's in-app purchase system, established in 2011 to help the firm catch up with competitors Apple and Google, was relatively rudimentary and lacked locks or passwords to prevent unuathorized users racking up huge bills. Within a month, internal emails show that Amazon was aware of "problems" that were "clearly causing problems for a large percentage of our customers," according to the FTC's lawsuit.

Amazon only added passwords months later, and did not apply them to purchases of less than $20 for a year. Even then, according to the suit, Amazon did not disclose that doing so once would enable further purchases for more than an hour.

The FTC settled a similar lawsuit with Apple earlier this year, when the company agreed to institute stricter policies and paid $32.5m in restitution. Amazon, informed of the pending lawsuit, said that it had no plans to change its system as Apple had, and would fight the action.

"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," Amazon's associate general counsel wrote in a response to the commission.

Part of the FTC's suit, however, alleges that the refund process itself is intentionally obscure and "rife with deterrents including statements that consumers cannot, in fact, get a refund for in-app charges."

Games aimed at youngsters are at the heart of the controversy, as they are typically free to download and play, only to bombard the user with enticements to pay for the virtual bullshit. The enticements are often clevery designed to "blur the lines between what costs virtual currency and what costs real money," writes the FTC, using visually similar icons and other psychological manipulations to generate unfair and unexpected charges.

Earlier this week, UK regulators ordered Electronic Arts to stop marketing its sleazy mobile game Dungeon Keeper as free-to-play after gamers complained that it was effectively unplayable without in-game paid upgrades.