Amazon Must Pay for Billing Children

SEATTLE (CN) — Amazon is responsible for children's unauthorized mobile app purchases, a federal judge ruled Tuesday.

A reasonable customer would not know "free" apps could accrue charges, U.S. District Judge John Coughenour wrote in granting summary judgment to the Federal Trade Commission.

The FTC sued Amazon in 2014, claiming the online retailer failed to get consent from parents for charges kids made through software applications, known as "in-app charges."

Amazon's policy is that all in-app purchases are final and consumers face "significant hurdles" to getting refunds, the FTC said in its complaint.

Amazon updated its policy in 2012 to require a password for charges of $20 or more. It changed the policy again in 2013 to require a password for all in-app charges, but applied the changes inconsistently, the FTC said.

Amazon did not require informed consent for in-app purchases until June 2014, shortly before the FTC filed its lawsuit, the FTC said.

Amazon claimed that it did disclose in-app purchasing, that a password was required, parental controls could be activated and that it gave refunds when appropriate.

But Coughenour found that Amazon expected too much from consumers.

"(I)t is unreasonable to expect customers to be familiar with the potential to accrue in-app purchases while using apps labeled as 'FREE.' Many of Amazon's arguments improperly assume a familiarity with in-app purchases on the part of consumers," Coughenour wrote.

Amazon's policy was not to provide refunds for in-app purchases, the judge found.

"Nothing on Amazon's website states that in-app charges are refundable. The confirmation email Amazon sends to consumers following an in-app charge is consistent with this policy: it does not provide any information about whether refunds for in-app charges are available or how to obtain one," Coughenour wrote.

Coughenour will rule later how much Amazon should pay in refunds.

The FTC reached settlements with Apple and Google for similar in-app charges, resulting in consumer refunds totaling more than $50 million.

"We are pleased the federal judge found Amazon liable for unfairly billing consumers for unauthorized in-app purchases by children," FTC Chairwoman Edith Ramirez said in a statement. "We look forward to making a case for full refunds to consumers as a result of Amazon's actions."

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