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Amazon on the hook for £56 million of in-app refunds

Amazon on the hook for £56 million of in-app refunds

Amazon is facing up to £56 million in refunds for in-app purchases made without the account holders' express permissions, following the withdrawal of its appeal against an FTC-led court ruling.

Amazon has withdrawn its appeal in a US Federal Trade Commission (FTC) investigation regarding children buying in-app downloadable content without the permission of their parents, opening the way to refund claims totalling up to £56 million.

Amazon's App Store, like almost all mobile software storefronts, allows developers to monetise their applications in a variety of ways: You can put adverts in them, you can charge actual cash money to download them, or you can offer them for free then try to land 'whales' by adding downloadable content for sale ranging from extra levels or in-game items to a reset of an in-game timer that would otherwise prevent you playing the game for more than a few minutes a day. Unsurprisingly, many games choose a combination of adverts and in-app purchases, and equally unsurprising is the fact that young children given what their parents think is a 'free' game to play find a way to spend hundreds of pounds on said in-app purchases.

While most storefronts include options designed to prevent accidental or unauthorised purchases, including the requirement to re-enter the account password for each purchase, few enable these settings by default. In 2016, a US federal judge granted a summary judgement against Amazon for allowing children to make purchases without the authorisation of their account-holding parents, and Amazon, facing considerable potential refunds, naturally appealed.

A year later, Amazon has officially withdrawn its appeal following an agreement with the Federal Trade Commission which could make up to £56 million in unauthorised purchases made between November 2011 and May 2016 in the US eligible for a complete refund. In exchange, the FTC has withdrawn its own appeal which called for an injunction preventing Amazon from carrying on in the same vein.

'This case demonstrates what should be a bedrock principle for all companies: you must get customers' consent before you charge them,' claimed Thomas B. Pahl, acting director of the FTC's Bureau of Consumer Protection, following the announcement of the appeals' nullification. 'Consumers affected by Amazon's practices can now be compensated for charges they didn’t expect or authorise.'

Details of how to claim a refund have not been provided, and Amazon has not said whether it plans to make the refunds available only in the US or internationally - the former being its only legal requirement as a result of the case but the latter being arguably the only moral choice.

12 Comments

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SinxarKnights 5th April 2017, 14:10 Quote
Imagine how much their legal fees would have to be for them to withdraw and settle for a 56 million max payout. I am thinking they took the easy way out because it has been quite a while since this happened and many of those people will not ask for refunds now because of being lazy, don't care anymore or forgot about it.

Feel free to correct me if I am wrong though.
fix-the-spade 5th April 2017, 23:34 Quote
Quote:
Originally Posted by SinxarKnights
Imagine how much their legal fees would have to be for them to withdraw and settle for a 56 million max payout.

I think Amazon would be far more worried about losing in court than the lawyers fees.

So far they have a summary judgement against them, that doesn't set precedent. If they took it to trial and lost it could cause Amazon (and Apple, Google, Valve) all kinds of problems with who's liable for unauthorised or fraudulent in-app purchases going forwards.

As it is they've lost three and a half-ish days of last year's profit, but any trouble they have with the FTC in future starts from zero as it were. It also gives them time to think about and implement more thorough authorisation processes and set standards for apps on the store.
wolfticket 6th April 2017, 00:28 Quote
Citing this as a precedent does anyone want to join my class action suit regarding in app purchasing while drunk?
SinxarKnights 6th April 2017, 10:17 Quote
Quote:
Originally Posted by fix-the-spade
I think Amazon would be far more worried about losing in court than the lawyers fees.

I was assuming they would have lost anyway. That makes sense though, thanks for your insight.
leexgx 7th April 2017, 23:53 Quote
It is way to easy to easy to buy stuff on amazon as a test when I was on amazon prime video on playstation I clicked on star wars and clicked on the buy button and proceeded to immediately buy the movie with out warning (sky on demand and other on demand places normally asks a "are you sure" type of box of some sort before purchasing) but I had no issues with Amazon as I did the amazon support thing and they cancelled it and refunded it right away (set a pin code now for purchases as that's silly to easy to buy stuff with no confirmation box)
SinxarKnights 8th April 2017, 02:09 Quote
Interestingly Paypal used to be the same way. I accidentally bought Guild Wars: Eye of the North expansion. Didn't even have any money in my account or any accounts or cards linked to it.

I was trying to see the price and clicked buy. It just went though without any warning. Paypal contacted me about it and it was something about a good faith system they had in place on the weekends. At the time I was poor AF so I had no way to pay it and they just let it go. They changed their system since then but funny to think how it used to work.
MeMo 8th April 2017, 03:22 Quote
WoW!!!!! Not a big surprise though!!
TheMadDutchDude 8th April 2017, 04:11 Quote
Am I the only one thinking the kids just shouldn't have access to their parents card(s)? It's not an Amazon fault if they can't prove the purchaser was/is not the card holder...

Learn to parent better, damn it!
SinxarKnights 8th April 2017, 06:09 Quote
Quote:
Originally Posted by TheMadDutchDude
Am I the only one thinking the kids just shouldn't have access to their parents card(s)? It's not an Amazon fault if they can't prove the purchaser was/is not the card holder...

Learn to parent better, damn it!

That is the thing. You don't need their card. You just press buy and it buys with the stored info on their account.
MeMo 8th April 2017, 06:30 Quote
Quote:
Originally Posted by SinxarKnights
That is the thing. You don't need their card. You just press buy and it buys with the stored info on their account.

Yes, unfortunately that is the case:(
Anfield 8th April 2017, 09:33 Quote
Kids need their own accounts if they are old enough to have any access to any electronic devices and only gift cards should be used to buy anything on them.
Vault-Tec 8th April 2017, 09:41 Quote
Quote:
Originally Posted by leexgx
It is way to easy to easy to buy stuff on amazon as a test when I was on amazon prime video on playstation I clicked on star wars and clicked on the buy button and proceeded to immediately buy the movie with out warning (sky on demand and other on demand places normally asks a "are you sure" type of box of some sort before purchasing) but I had no issues with Amazon as I did the amazon support thing and they cancelled it and refunded it right away (set a pin code now for purchases as that's silly to easy to buy stuff with no confirmation box)

How does one set this pin code?

Long story short I recently gave our Fire Stick to my mother, because I preferred out Fire HD box (it loads up so much faster). Any way, yeah, Mum got a new TV and my brother wrecked her network cable whilst working on the floor so I decided to give her the stick as it works on wireless and she can use ITV player, Iplayer to catch up.

However, she's scared to use it because she's frightened she will watch something that is PPV without realising it. Her eyes ain't what they used to be (she's 70) so I would appreciate it if you can tell me how you put the pin in place. Then she can basically go for it like there's no tomorrow :)
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