Amazon To Refund Unauthorized In-App Charges

If your kid ordered something from an Amazon app without permission, you’re in luck (as long as it happened between November 2011 and May 2016, anyway).

In a landmark agreement between the U.S. Federal Trade Commission (FTC) and Amazon, the online retail giant will end appeals to last year’s court findings that Amazon billed consumers for unauthorized in-app charges incurred by children.

All told, some $70 million in unauthorized in-app charges will soon be eligible for refunds.

“This case demonstrates what should be a bedrock principle for all companies — you must get customers’ consent before you charge them,” said Thomas B. Pahl, acting director of the FTC’s Bureau of Consumer Protection in a statement. “Consumers affected by Amazon’s practices can now be compensated for charges they didn’t expect or authorize.”

Back in April 2016, a federal district court ruled that Amazon billed consumers for unauthorized in-app charges incurred by children using mobile apps. The court found that Amazon had failed to get parents’ consent for in-app charges.

The news follows similar cases filed against Apple and Google, said the FTC, which required the companies to fully refund consumers’ unauthorized charges.

What the agreement between Amazon and the FTC doesn’t cover is the incident involving a news report and a dollhouse last January.

In January, a local news station in San Diego ran a story about a six-year-old girl who accidentally ordered a $170 dollhouse with the help of Amazon’s Alexa. As the segment wrapped up, Anchor Jim Patton chatted and reflected on the story: “I love the little girl saying, ‘Alexa ordered me a dollhouse.’”

Unfortunately, Alexa was listening and started ordering dollhouses across the San Diego area on Amazon devices whose owners had not installed authentication measures for making purchases.

What this incident signals is that, as always, kids and payment technologies don’t mix. Expect voice-activated ordering to ignite the next big wave of contested charges involving technology and children.


Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.

Click to comment