July 3, 2014
Amazon Resist FTC’s In-App Purchase Request
Peter Suciu for redOrbit.com - Your Universe Online
On Wednesday the Wall Street Journal reported that Amazon.com is apparently standing its ground and could look to take on the Federal Trade Commission (FTC) over a request that the ecommerce retailer tighten its policies for purchases made by children when using mobile applications.
The paper reported that Amazon said in a letter to the FTC that it was prepared to "defend our approach in court." The retailer took this course of action as opposed to agreeing to potential fines, as well as additional recording keeping and disclosure agreements for the next 20 years according to documents that were reportedly reviewed by the WSJ.
Amazon has also called its parental controls on devices such as its Kindle Fire tablets to be "effective" and noted that the devices include "real-time notice" on all in-app purchases. These purchases could include new game levels, character upgrades in games, songs and other accessories.
The NextWeb published Amazon's letter from Andrew C. DeVore, vice present and assistant general counsel, to FTC Chairwoman Edith Ramirez in its entirety on Wednesday.
In the letter Mr. DeVore noted:
"The main claim in the draft complaint is that we failed to get customers' informed consent to in-app charges made by children and did not address that problem quickly or effectively enough in response to customer complaints. 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. And as we have made clear from the outset of your inquiry, our experience at launch was responsible, customer focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service."
DeVore added that in-app purchasing remains a new and "rapidly evolving segment," but stressed that Amazon has taken steps to improve the customer experience.
The issue at hand remains as many app stores, including those run by Amazon, Apple and Google, now feature applications that allow for users to make purchases within the actual app – and these can range in price from 99 cents to more than $100. App store owners typically can keep about 30 percent of these fees.
Amazon was not singled out by the FTC, which also named Apple in a complaint involving in-app purchases. This came as a result of complaints by parents that their children had made unauthorized purchases on smartphones and tablets.
In January of this year Apple agreed to a $32.5 million settlement with the FTC over in-app purchases. The company was required to refund the money to parents whose children racked up hefty tabs. Apple also settled a civil lawsuit over the same issue with the State of California last year.
"The commission is focused on ensuring that companies comply with the fundamental principal that consumers should not be made to pay for something they did not authorize," an FTC spokesman told the Wall Street Journal. "Consumers using mobile devices have the same long-established and fundamental consumer protections as they would anywhere else."
Analyst Rob Enderle of the Enderle Group agreed with the FTC's call for action.
"There need to be some rules and reasonable limits," Enderle told redOrbit. "It is way too easy to spend hundreds of dollars in a 'free' game that should cost under the old model under $20. If the app stores don't regulate this more aggressively then governments should and will step in and they'll lose customers. This last should drive reasonable moves to reign this in but isn't."