FTC Sues Amazon Over Kids' Unauthorized In-App Charges

(RTTNews) - The U.S. Federal Trade Commission said Thursday that it has filed a lawsuit against Amazon.com, Inc. (AMZN), alleging that the online retailer has unlawfully billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children.

The FTC lawsuit, filed in the U.S. District Court for the Western District of Washington, seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent. According to the complaint, Amazon keeps 30% of all in-app charges.

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," said FTC Chairwoman Edith Ramirez. "Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

According to the complaint, thousands of parents complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges.

The Commission is seeking full refunds for all affected consumers, disgorgement of Amazon's ill-gotten gains, and a court order ensuring that in the future Amazon obtains permission before imposing charges for in-app purchases.

This is the Commission's second case relating to children's in-app purchases. Apple, Inc. (AAPL) settled an FTC complaint concerning the issue earlier this year.

Amazon shares closed Thursday's regular trading session at $327.92, down $2.05, but gained $3.63 or 1.11% in after hours trading.