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FTC Says Amazon Charged Kids and Must Now Pay Parents

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There has been some interesting events in an ongoing case between Amazon and the FTC.  The case started back in 2014 when the FTC sued Amazon claiming that it allowed children to make millions of dollars in in-app purchases without proper parental permission.  This was just months after Apple Inc paid $32.5 million to settle a similar case. Amazon, however, decided to fight the case rather than settle.

Amazon (like Apple) offered refunds to those who had these charges.  This, they claim, should be sufficient to resolve the matter, which is why they believe the FTC is wrong for continuing their claim.

In a reply brief the FTC argued that Amazon caused ‘substantial injury to customers’ and that the simple fact that the customers were required to seek the refunds for their children’s unauthorized in-app charges is ‘injurious in itself’ and that these consumers spent time and effort to resolve the situation.

The FTC specifically stated that, “In Amazon’s view, injury must be irreversible to be unfair, its ‘award-winning’ customer service allows it to engage in unauthorized billing with impunity, and rampant refund requests absolve it of liability rather than show the extent of the violation.  The mere possibility of remedying injury has never been a defense to an FTC action before.”

Amazon countered by saying, “Its requested injunction is nothing more than an attempt to impose hindsight-driven views of best practices without any balanced consideration of the net effects to customers.”

Essentially Amazon is arguing that at the time when this was occurring (years ago with the first-generation Kindle Fire) Amazon did not and reasonably should not have had to predict this problem.  While it seems obvious today that requiring a password on each individual purchase is important, that was not necessarily true at the time.

This is an issue common in the fast moving tech world.  Companies product products or services that have unforeseen issues.  Once the issues come to light they seem quite obvious, but should the FTC judge based on today’s standards?

The case is ongoing and it is difficult to predict what the FTC will do.  Amazon, however, seems committed to fighting this through the courts.

For marketers this is an important case to follow because it could set precedent on not only situations similar to this but any case that has a hindsight looking basis like this.

Pesach Lattin
Pesach Lattinhttp://www.adotat.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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