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Thousands of Parents Could Be Entitled to a Refund From Amazon

Amazon in on the hook.Amazon in on the hook.
Amazon in on the hook.Photo Courtesy: Getty Images

Amazon (AMZN) will have to refund parents who were billed for unauthorized purchases made by their children inside an app, the Federal Trade Commission said Wednesday.

A U.S. District Court ruled Tuesday that Amazon is responsible for failing to inform consumers of in app-charges in several cases. The federal court will decide the amount of money owed by Amazon in coming months.

“We look forward to making a case for full refunds to consumers as a result of Amazon’s actions,” said FTC Chairwoman Edith Ramirez in a statement. The FTC sued Amazon on behalf of consumers.

The ruling comes after Amazon received several complaints from consumers that they had been charged for in-app purchases completed by their children without their explicit consent. In some cases, children would make purchases without understanding that they were using real money, according to court documents.

“Many apps geared towards children, and likely to be used by children, offer in-app purchases,” the court document stated. “For example, a child may be prompted to use or acquire seemingly-fictitious currency, including a ‘boatload of doughnuts, a can of stars, and bars of gold,’ but in reality the child is making an in-app purchase using real money.”

A single in-app purchase usually ranges from 99 cents to $99.99.

When Amazon first introduced in-app purchases in late 2011, payment accounts were linked directly to credit or debit cards, and payments did not require further forms of authentication, meaning a child could be using an app, such as Farm Story or Pet Shop Story, and make an in-app purchase for a virtual money without their parent.

Additionally, when the in-app purchases first launched, some apps loudly advertised that the app itself was free—but would force users to scroll down “below the fold” to see that it had in-app purchases.

The commission has previously reached settlements with Apple (AAPL) and Google (GOOGL) after the two tech giants charged parents for items purchased by their children. Roughly $50 million was refunded to consumers in total.

Amazon has since set up an optional parental control for in-app purchases, which requires a PIN before a payment is completed. When Amazon first set up the function however, a password was only required if the in-app purchase exceeding $20.