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

April 5, 2017 | 10:04

Tags: #app-store #dlc #downloadable-content #f2p #free-to-play #in-app-purchases #legal #refund #refunds

Companies: #amazon #ftc

Amazon has withdrawn its appeal in a US Federal Trade Commission (FTC) investigation regarding children buying in-app downloadable content without the permission of their parents,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A year later, Amazon has officially withdrawn its appeal following an agreement with the Federal Trade Commission which could make up to £56 million in unauthorised purchases made between November 2011 and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 In exchange, the FTC has withdrawn its own appeal which called for an injunction preventing Amazon from carrying on in the same vein.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.
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