Amazon’s in-app payout pending

amazon

Reed Saxon, AP

via Moak: Amazon’s in-app payout pending, clarionledger.com

Back in 2014, I wrote about how the Federal Trade Commission had sued Amazon.com over allowing children to charge things on smartphone and tablet apps without their parents’ consent. The online commerce giant was at that time accused of not only allowing kids to rack up charges on their parents’ accounts, but profiting from it. The tech website CNET.com estimates 2015 in-app purchases (known as IAP) were expected to reach $5.6 billion across the industry.

Just last week, a federal court granted the  FTC’ request for summary judgment in the case, which mirrors similar cases against online giants Apple and Google. The judgment allows the parties in the case to proceed with determining just how much the company is going to have to hand over to regulators, as well as figuring out how much (if anything) consumers will be refunded.

In the Apple and Google cases, charges were settled some time ago and cost the companies about $50 million in refunds to consumers.

The original complaint alleges Amazon.com knew about the issue for years, and cited internal documents warning the situation could easily escalate out of control.

According to the FTC, many parents complained that their kids had been racking up charges in the “free” apps, without giving them enough information to learn how to prevent it. Amazon argued it gave sufficient notice that in-app charges could occur, and that parents could forestall charges if they wanted.

At issue is the practice of granting users of smartphone, tablet and computer apps the ability to get upgrades, or to purchase game incentives. For example, a user of an online role-playing game called “Ice Age Village” could buy virtual “coins” and “acorns” once their free supply had run out. The items could be charged to a linked account, and the owner of the account (usually a parent) would get the unwelcome bill later. Charges for some games can reach hundreds of dollars or more. (That’s in real money, not virtual cash).

Companies marketing these games understand how to lure customers, often offering “free” versions with limited expansion. But once you’ve played all the levels in the free (“freemium”) version, you’ve got to pay up if you want to continue. CNET noted one popular game called “My Little Pony” allowed users to initially  play for free, earning experience points and unlocking six “ponies” as they went. But CNET’s Michelle Starr, after playing the game, noted, if they wanted access to higher levels, they would have to pay up.

“It is, quite simply put, the most blatant demonstration of sheer greed that I’ve ever seen in a freemium title,” Starr reported. Gameloft and Hasbro knew the legions of ‘My Little Pony’ fans would flock to the title, and that they would want that last pony unlocked. They also, presumably, knew that children would gravitate toward the game as well.”

Cyberspace is full of horror stories about shocked parents who got the bill for their kids’ in-app purchases. One notorious example was detailed in December, when a British child allegedly racked up more than $5,800 playing an iPad game called “Jurassic World,” at one point charging $2,200 in a single hour.

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

Parents aren’t powerless when it comes to controlling their kids’ online purchases, but it requires a little knowledge and an understanding. The site digitaltrends.com has some great advice. Keep in mind that the options for controlling in-app purchases may differ with the brand and type of device. For example, iPhones and other Apple products have different options than Android and other types of devices.

If you’re not sure whether your kids can charge in-app purchases on your device, it’s a good idea to find out now, before it becomes a problem. Here are some links to advice:

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