Amazon Fighting FTC Over In-App Purchases Fine

An anonymous reader writes One of the common problems of the smartphone generation has been parents who given their phones to children, who then rack up hundreds of dollars of in-app purchases without the parents' knowledge. The FTC smacked Apple with a fine for this, and Google is facing a lawsuit as well. Now, Amazon is the latest target, having received a complaint from the FTC demanding a similar settlement to Apple's. Amazon, however, is not willing to concede the fine; they plan to fight it. Amazon said, "The Commission's unwillingness to depart from the precedent it set with Apple despite our very different facts leaves us no choice but to defend our approach in court (PDF). 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 continually 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."

Comments

It's Intended

[lawnboy5-O]

There is no doubt in my mind this was part of the ROI model when they were thinking up ways to pilfer your dollars in somewhat covert ways... there is also no doubt they can make this effort much more transparent for the same reason.

Re:It's Intended

[JMJimmy]

In app purchases should be banned. They're horrible for the industry, in some cases they're no better than gambling (ie: buy tokens to feed into this jackpot like system to win a random digital item!). At the very least they should have a maximum any one user can spend before everything becomes free.

Re:It's Intended

[causality]

in some cases they're no better than gambling (ie: buy tokens to feed into this jackpot like system to win a random digital item!)

Not that I disagree with you, but what part of the gaming industry isn't preying off of exactly the same neurons as gambling? Nearly every game, be you buying the game itself, in-game purchases, or DLC, is getting its revenue almost entirely due to exploiting pleasure-seeking behavior.

Gaming typically relies on skill, not chance. If you play most games long enough, you'll be able to consistently beat certain levels. If you win at the roulette wheel, you're no more likely than before to win again. That's the difference. Otherwise, "exploiting pleasure-seeking behavior" could be stretched to describe every last industry in existence beyond the sales of food, water, shelter, and basic utilities.

With the model of directly purchasing the game itself (and no in-game purchases, like standard PC/console gaming) you can at least read about the game and have a reasonable expectation about what you are paying for. The real problem with in-game purchases is that the game is "free" or low-cost in the most technical sense, but after you invest many hours advancing the game you find that you can't really prosper without making additional purchases. It could be construed as a form of bait-and-switch.

The other problem would be that many of these games are aimed at children who make purchases the parents later get stuck with, but this problem begins in the home and should be solved within the home by actual parenting. That's not as convenient as using the tablet like a cheap babysitter but it would certainly be more worthwhile. If you wanted to solve this by government action, that's simple too: declare that these purchases are contractual in nature (the parent agreed to pay charges made to the phone bill or whatever) and that minors who make them cannot be held to a contract, therefore the companies cannot collect money when children make them. *Poof* - end of shitty business model.

It's not just the refund

[Todd Knarr]

I think Amazon's problem is going to be that just refunding the purchases doesn't help the parents. If the kid maxes out the credit-card on in-app purchases, the parents have to deal not just with those purchases but the fees and interest from over-limit charges on the card and/or the additional costs associated with any declined charges (eg. if I pay a bill on-line using my card and the charge is declined, I get hit for late fees and possibly service disconnections). Having this happen when you're out-of-town (eg. the kid does this while the family's on vacation, and when you go to check out of the hotel you can't pay your hotel bill and you have to figure out why without being able to check your accounts on-line to see what unexpected charges are there). The only acceptable way of handling things is what Amazon should've done from the start: once parental controls are turned on in an app, all actions that would cause a charge or affect parental controls always require a PIN (and ideally there'd be an option to say "don't allow charges period until parental controls are turned off again").

Re:It's not just the refund

[Xenx]

People aren't willing to accept responsibility for themselves and their kids. We shouldn't be forcing the companies to accept the responsibility instead. If you don't agree with how Amazon does it, don't buy their devices or use their appstore. If they feel they're losing too many customers based on their business practices.. they'll change them. Either way, they shouldn't be targeted by the FTC.

The Amazon AppStore Auto-consent

[Frobnicator]

Nope, they need the penalty.

The Amazon AppStore app seems to have an update every two weeks. Every time it updates itself, it resets the values for IAP and parental controls. You need to manually go in after every update, disable IAP and confirm with the password, then manually reset the parental controls and confirm with the password. EVERY FREAKING TIME.

There was one instance (that I know of) that I didn't reset the parental controls and IAP flags after an update, and sure enough, that was when the kids discovered it and went on a spending spree.

NO EXCUSE for resetting the flags every update. They know about it. It isn't a bug, it is a feature that enables profits.

Re:The Amazon AppStore Auto-consent

[Greyfox]

Glad we didn't have this in the 70's. I don't think my sister or I would have survived the beating.

Re:The Amazon AppStore Auto-consent

[itsdapead]

What is next, blame Ford because your kid was able to steal your keys off your dresser and wreck the car while you are sleeping?

...if Ford made the key fob in the shape of a cartoon character with a voice chip that kept saying "Hey kids! Pick me up and lets go for a drive" then, maybe.

Yes, parents should take responsibility for their kids - but that doesn't give businesses the right to exploit their slightest lapse.

Re:The Amazon AppStore Auto-consent

[eclectro]

They know about it. It isn't a bug, it is a feature that enables profits.

The games are purposefully engineered to be faulty so that you are *required* to make an in app purchase. And with the 'one click' nature of the in app purchases, it is easy for the game to make a purchase for you - either by mistake or by design!