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FTC Files Suit Against Amazon For In-App Purchases

Posted by samzenpus on from the a-fool-his-kids-and-his-money dept.

Charliemopps writes The Federal Trade Commission has filed suit against Amazon for illegally billing parents for in-app purchases of digital goods prior to requiring a password for making purchases. "The FTC's complaint, filed Thursday, asks the court to force Amazon to refund the money to those customers. In-app purchases typically involve virtual goods bought within an app, like extra coins or energy in a game, according to the FTC. Some bills totaled hundreds of dollars, and some virtual goods cost as much as $99.99." We recently told you about Amazon's refusal to reach a settlement over these FTC complaints.

30 of 47 comments (clear)

  1. about time by JoeJohnson2175 · · Score: 1

    I still remember when I interviewed with the team in Irvine, CA. No attention to use experience... Amazon is a personification of the movie, Mimic.

    1. Re:about time by Anonymous Coward · · Score: 1

      I really know nothing about how Amazon works internally, so perhaps you can enlighten me.

      If it is as dysfunctional as you say it is, how do they manage to do such great things with software? How do they manage to create their website? How do they manage to operate such a huge warehousing and logistics operation? How do they manage to create AWS, which itself hosts so many other significant web properties?

    2. Re:about time by Anubis+IV · · Score: 3, Interesting

      He only claimed that they paid no attention to user experience, not that they're shoddy at engineering things. The examples you provided actually demonstrate that point.

      For instance, I read a few years back about how Bezos had then-recently hired designers to redo the website since its design seems like an over-crowded holdover from the '90s, before disregarding their ideas entirely because he couldn't bear to be without all of the stuff that's currently packed in. Likewise, their software for the Kindle Fire line can do some really neat stuff, but everything I've heard and seen indicates that it's sub-par from an experience perspective (e.g. unresponsive/laggy UI, inconsistent app designs/flows, disregard for common and obvious use cases). As for AWS and logistics, what of them? Logistics is entirely internal, while AWS isn't aimed at end users at all.

      They can and do make cool stuff that's well-engineered, but there's a big difference between good engineering and good design. I, and I believe the OP, are accusing them of lacking the latter when it comes to their consumer-facing endeavors. Pretty much everything about Amazon feels like a cheap commodity, which is fine when I want cheap cables from their Amazon Basics line that I'll plug in once and never touch again, but isn't so good when it's something I'm interacting with on a daily basis, such as their site.

    3. Re:about time by Anonymous Coward · · Score: 1, Informative

      I really know nothing about how Amazon works internally, so perhaps you can enlighten me.

      how do they manage to do such great things with software?

      By ripping off Android for their mobile platform and then screwing developers who sign their awful agreement?

      How do they manage to operate such a huge warehousing and logistics operation?

      By allegedly exploiting and shorting their employees and having soulless fulfillment centers/neo-sweatshops?

    4. Re:about time by tlhIngan · · Score: 1

      All that needs to be said is to compare woot.com after it's been taken over by Amazon with the new site the Woot founder started up - meh.com (yes, it's called meh).

      Hell, if you remember woot's website before the takeover, it bears a closer resemblance to meh than today.

      As for Amazon's awful ToS? Amazon is Apple-lite. They have an approval system just like Apple, and that's where Amazon's value-add is.

      Remember how we keep asking for someone to do a curated app store to help get rid of the iffier apps found on Google Play? Here's Amazon.

    5. Re:about time by d'baba · · Score: 1

      If it is as dysfunctional as you say it is, how do they manage to do such great things with software?

      In the Amazon.com warehouse that I worked in the tools we all worked with were written in Perl.

    6. Re:about time by StripedCow · · Score: 2

      It's also time they address the infamous one-click buying button, which is basically the same thing.

      --
      If Pandora's box is destined to be opened, *I* want to be the one to open it.
    7. Re:about time by internerdj · · Score: 1

      Since the only time this happened to me I got a script answer about how they would fix it just this once, I've wondered could I do a credit card challenge if Amazon refused to refund. Essentially, to me the consumer, Amazon is charging my card without authorization. Since Amazon refuses to resolve the situation after the first occurance, isn't that grounds for me to pursue it with my card company or did I sign that right away in a EULA somewhere?

  2. Failing to learn from history? by Phroggy · · Score: 1

    Didn't Apple go through this exact same issue with the iPhone app store a few years ago, and they fixed it?

    --
    $x='S24;r)>63/* h@<5+oZ)32"5cz';$me='phroggy'x$];
    $x=~y+ -xz+\0-Tx+;print$_^chop$me for split'',$x;
    1. Re:Failing to learn from history? by rmdingler · · Score: 4, Informative
      Indeed. They were persuaded to refund 32.5 million or so US Dollars by the ftc...arguably a small percentage of the take from the operation.

      They knew what they were doing, and they also know only a given percentage of those affected will ever seek damages.

      If X is less than the cost of a recall, we don't do one.

      --
      Happiness in intelligent people is the rarest thing I know.

      Ernest Hemingway

    2. Re:Failing to learn from history? by Bob_Who · · Score: 1

      Didn't Apple go through this exact same issue with the iPhone app store a few years ago, and they fixed it?

      Yes, your absolutely right.

      A pattern is beginning to emerge where the enforcement of laws has transformed into the institutionalized funding of government with punitive measures that neither protect the consumer nor discourage future violation of ethics and common decency. Is this regulatory befuddlement really working for Americans if the evil corporate behavior is not deterred? I am glad some folks are paying attention and remember the relevant recent events so that we may become angry villagers and start chopping off heads.

    3. Re:Failing to learn from history? by parkinglot777 · · Score: 2

      The companies (and I do hate Amazon and pretty much all the other monopolies in this country) should also use common sense knowing you have idiots that lack any sense to better protect your company.

      If you think it differently, you would see that common sense is not equal to profit. Big corporations (or any of those who are out to make more money) do try any business practice and hope they can get away with. In this case, they have a certain level of expectation on parents' to be able to foresee what their kids are going to do. They try to push the responsibility on parents and exploit the loop hole in order to get away with their business practice. So why do they care for common sense that many parents are idiot or short sighted?

      Also, let me ask you this. How many big business out there that really care and apply common sense of their customers to their practice? They may start off with caring for their customers. Once their customers are locked in, at one point they all make their own rules and expect customers to follow. Now it becomes "take it or leave it." How many customers actually leave even though they make a complaint? This happens not only in the U.S. but everywhere else in the world. It is the business common sense to exploit other humans...

  3. Where is section 5? by sumdumass · · Score: 4, Informative

    Here is the complaint in PDF
    http://www.ftc.gov/system/file...

    It says section 5(a) but I'm having trouble locating section 5.
    http://www.law.cornell.edu/usc...

    Anyone got any ideas where I'm doing it wrong?

    1. Re:Where is section 5? by Bob_Who · · Score: 4, Funny

      Anyone got any ideas where I'm doing it wrong?

      You actually attempted to read it.

    2. Re:Where is section 5? by itsdapead · · Score: 5, Funny

      Anyone got any ideas where I'm doing it wrong?

      You need to 30 gems to get the Magic Scroll of Tort and unlock section 5. Best way is to purchase the "LawyerUp Gold" pack for $14.99.

      Thank you for playing Crazy Courtroom Saga 3.

      --
      In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
    3. Re:Where is section 5? by Mister+Transistor · · Score: 1

      +1 Virtual Mod Point (out today, sorry!), Funny.

      --
      -- You are in a maze of little, twisty passages, all different... --
    4. Re:Where is section 5? by Anonymous Coward · · Score: 1

      You found it. You can also get it from the Law Revision Counsel at the following: http://uscode.house.gov/

      Here is a link to section 5 of the Federal Trade Commission Act:

      http://uscode.house.gov/view.xhtml?req=%28title:15%20section:45%20edition:prelim%29%20OR%20%28granuleid:USC-prelim-title15-section45%29&f=treesort&edition=prelim&num=0&jumpTo=true

      The reason it says section 45 rather than section 5 is because section 5 of the Federal Trade Commission Act is not in a positive law title of the United States Code. Various folks have created an unofficial title 15 of the United States Code, which includes the FTC Act along with many other commerce related public laws. In the process of compiling title 15, they renumbered all the sections, with section 5 of the FTC Act become section 45 of title 15 of the United States Code. Because title 15 of the United States Code is not a positive law title of the United States Code, the proper citation is "section 5 of the Federal Trade Commission Act (15 U.S.C. 45)", with the parenthetical included to help the reader find the actual text.

    5. Re:Where is section 5? by sumdumass · · Score: 1

      So section 5 was basically the bills as passed and title 15 section 45 is the act in the US code. Do I have that right?

      In that case, they are claiming the entire section 45 as the basis of the illegality which makes some sense. After reading it, I saw several places in which it should apply.

      Thanks for the explanation. For a minute there, I thought Amazon would be able to get off on a technicality and the FTC was incompetent or something. Turns out it was just me.

  4. Re:Self incrimination by rmdingler · · Score: 1

    No, but try the CPS 24 hour reporting number.

    --
    Happiness in intelligent people is the rarest thing I know.

    Ernest Hemingway

  5. Re:too bad for the FTC by KingOfBLASH · · Score: 2

    they're not real and have no constitutional authority

    You're not real and have no constitutional authority!

    Now now children, there's enough constitutional authority out there for everyone. :D

  6. apple system needed an password for free apps by Joe_Dragon · · Score: 1

    apple system needed an password for free apps the same one used to buy stuff also IOS used to have the 15 min no password needed time.

    Why not have so there is a pin to buy stuff / setup it to only ask for a password to buy stuff and it's not needed for free stuff?

  7. Re:too bad for the FTC by x0ra · · Score: 1

    Don't they have this right under the "Commerce Clause". [which is indeed known to have been abused, but still]

  8. Interesting... by BobMcD · · Score: 1

    This seems to have implications in that whole free-to-play space. I wonder if anyone is worried about that angle?

    1. Re:Interesting... by Himmy32 · · Score: 2

      No one has problems with the micro-transactions themselves. But for them to be made without having to type the account password. So when you die in an app a dialog might pop up saying click ok to get another life and the parents account gets magically charged $10. No one really cares if the person charges that much for a life, but that there is a proper warning and approval. Free to play will be just fine, unethical apps that try to scam small children hopefully won't.

    2. Re:Interesting... by BobMcD · · Score: 1

      I can see every app requiring a password and approval for all purchases.

      That alone will hurt the model.

  9. Parental responsibility by ai4px · · Score: 1

    Gasp.... kids are pressing buttons in a game. Hey Mom and Dad... supervise your kids and what they do. Problem solved. I never cease to be amazed how found money (refunded money) can bring out the worst in people.... people are willing to look like irresponsible victims for a few bucks. Dignity and selfrespect are out the window if the price is right.

    1. Re:Parental responsibility by Himmy32 · · Score: 2

      No one is going to argue that parents shouldn't be watching what their children do. However if the system is set up that you can spend $100 in 2 clicks in Playskool-like game without entering the account password, something is wrong. The whole point of the suit is that apps could buy from the app store from inside the application without entering the password or having any sort of Parental Control. Amazon knew that this was a problem and profited off of it. And you are calling the parents greedy...

    2. Re:Parental responsibility by rochrist · · Score: 1

      Yeah, no. Part of the reason for this complain is because apps were specifically being misleading about when actual money (as opposed to some sort of in-game currency) was being spent. Pretty damn close to fraud.

  10. Re:too bad for the FTC by stoploss · · Score: 1

    Don't they have this right under the "Commerce Clause". [which is indeed known to have been abused, but still]

    Your opinion, publicly stated, might negatively affect commerce, which could have ripple effects in the economy of another state. Ergo, your ability to state your opinion publicly is regulable under the commerce clause. Don't worry: you're free to express your ideas in your mind, so long as you do not communicate them to anyone else in any form.

    This line of reasoning is consistent with the Supreme Court's ruling in Gonzalez v Raich, Wickard v Filburn, et al.

    The Commerce Clause has been blatantly twisted into an unconstitutional interpretation. They baldly lie and say it means something it clearly does not (remember, those decisions I cited defined commerce as including "not commerce"). Once you assert B AND NOT B == TRUE, then you can apply this logical fault to reason to any conclusion you wish.

    So, to answer your question: yes, they assert they have this power under the constitution (technically, it's improper to say the government has "rights").

    It might even be one of those rare constitutional applications of federal enumerated powers if it were limited to interstate commerce, but we all know that's not the case.

  11. Re:watch you kids by Himmy32 · · Score: 1

    A more apt comparison would be, Little Billy go play in the ball pit at the fast food restaurant. The restaurant has put a button in the ball pit that charges the parents credit card without the parents approval when jumped on. And in that case you think it's a problem that the parents would want their money back...