Washington: Amazon.com was sued on Thursday by the US government for allowing children to use mobile apps to rack up millions of dollars in charges without getting permission from parents, who were stuck with the bills.
The lawsuit, filed by the Federal Trade Commission, seeks to make the online retailer refund money spent without parental authorization and to end Amazon`s practice of allowing unlimited purchases without requiring a password or other mechanism to give parents control over their accounts.
The unauthorised charges are often associated with children`s apps, such as games, that can be free to download but allow players to make in-app purchases by buying "coins" or other digital products with the credit card associated with the device, the FTC said in its complaint. An in-app purchase is one made within a mobile application, according to Webopedia.com.
The apps run on Amazon`s Kindle Fire, Kindle Fire HD and mobile devices that use Google`s Android operating system.
The FTC settled a similar case with Apple Inc in January. Apple agreed to refund to customers at least USD 32.5 million in unauthorized charges made by children and to change its billing practices to require consent from parents for such in-app spending.
Amazon declined comment, and instead referred reporters to a letter that its vice president and associate general counsel, Andrew DeVore, wrote to FTC Chairwoman Edith Ramirez dated July 1.
In the letter, DeVore protested the FTC`s threat to file a lawsuit against the company if it did not agree to a consent order along the lines of the one reached with Apple in January.
DeVore also said the FTC threat to sue "leaves us no choice but to defend our approach in court."
The FTC said in its lawsuit that Amazon responded to complaints about unauthorized charges by requiring use of passwords for large purchases starting in 2012. That was extended to all purchases in early 2013 but once a password has been punched into the device, a purchase window remains open for up to an hour, meaning that further charges could be made without parents` knowledge, the complaint said.
The complaint quotes an Amazon official as saying shortly after the program began: "We believe that parents are excluded from the buying process for these apps."
Some parents said their children spent hundreds of dollars without their knowledge, the complaint said. Amazon bills for the in-app purchases and keeps 30 percent of the charges, the complaint added.
Amazon.com shares were down 0.5 percent at USD 313.78 in afternoon US trading.
